If you can make your monthly debt payments but are struggling with the accumulating interest and juggling multiple creditors, a dmp may be the best solution.  A consumer proposal may be a better option if your assets are significantly less than your debts and you can’t make the monthly required payments.

A Licensed Insolvency Trustee will provide a free consultation to review your financial situation in detail and analyze if a dmp or consumer proposal is the best debt relief solution for you.  The trustee will explain the following differences between the two solutions:

Debt Management Program

  • Negotiated through a not for profit, accredited credit counselling agency
  • Pay your creditors in full typically over a 4-year time period by making one monthly payment to the agency who then distributes the funds to your creditors
  • Interest is reduced and may eliminated
  • Can’t force creditors to participate, and some creditors, like Canada Revenue Agency, won’t participate
  • Reported as an R7 for 3 years from completion of the program

Consumer Proposal

  • Negotiated through a Licensed Insolvency Trustee
  • Stay of proceedings on filing, which stops garnishments and collection activity
  • Offer a compromise to your creditors payable over a maximum of 5 years
  • Proposal must offer more to your creditors than would be available in a bankruptcy
  • Requires the majority in dollar value of creditors voting to accept the terms. All unsecured creditors are then bound by the proposal terms.
  • Canada Revenue Agency for personal income tax and student loans will participate in a consumer proposal
  • No further interest and payments include the trustee’s fees
  • Reported as an R7 for 3 years from completion of the program

I caution you against paying anyone for an initial consultation.  The Office of the Superintendent of Bankruptcy (Industry Canada) is warning debtors to avoid debt advisors  and recommending you seek advice from a professional.  Reach out to Kathy Lenart or Jeff Lewis at Taylor Leibow Inc. for a free consultation to find the best solution for you.

Kathy LenartBy Kathy Lenart – Insolvency Partner, Licensed Insolvency Trustee
CPA, CA, CIRP
Canadian Association of Insolvency and Restructuring Professionals (CAIRP)