Two of the most popular debt management programs used as an alternative to bankruptcy are a consumer Proposal and a debt management plan or DMP. While each have advantages and disadvantages, they are two drastically different debt management services. Understanding the key differences between a debt management plan and a consumer proposal can help you choose the right option for you.

Debt Management Programs:Consumer ProposalDebt Management Plan
Who FilesA Consumer Proposal can only be filed through a federally licensed Trustee.An accredited credit counselling agency.
Debt ReductionGenerally up to 85% of your debts.None. You are required to repay your debts in full.
Interest FreezeYesUsually
Debts EliminatedAlmost all unsecured debts including credit cards, payday loans, bank loans and tax debts.Generally only credit card debt and bank loans. CRA will not reduce your debt through a credit counselling agency.
Binding on all creditorsYes, once a proposal has been accepted all creditors are bound by the terms of the proposal.No, you can pick and choose which debts to include but your creditors can also opt out of the debt management plan.
Keep AssetsYesYes
Creditor ProtectionYesNot automatic; only if creditors agree.
Stop Wage GarnishmentsYesNot automatic, only if creditors agree.
Deal With CRAYesNo
Credit RatingAn R7 rating remains on your report for 3 years after completionAn R7 rating remains on your report for 2 to 3 years after completion

Getting a Debt Assessment

In most situations, your payment under a consumer proposal will be significantly less than they would be under a debt management plan.

In order to help determine which option is best for you, we recommend you talk to one of our experts about a free, no-obligation debt assessment. During this process we will ask you:

  • What type of creditors you owe money to
  • How much you owe each creditor
  • What your monthly budget looks like.

With this information we can help you determine whether a consumer proposal or a debt management plan is your best choice given your unique financial situation.

We call this process Debt Free in 30 - simply call us at 1-866-747-0660 or email us at Hoyes, Michalos & Associates today. Get started on your debt free plan.