A debt management plan is administered by a not for profit credit counsellor, and they are often able to negotiate a settlement where you repay your debts in full, but often at reduced or zero interest.
For example, if you owe $60,000 on credit cards, it may take you many years and $100,000 to repay the credit cards with interest. In a debt management plan you would repay around $60,000, with no interest, so your payments would be approximately $1,000 per month for 60 months. A debt management plan is a good solution if you have the ability to repay your debts in full, but need a break on the interest.
A consumer proposal is a debt solution administered by a licensed bankruptcy trustee acting as the consumer proposal administrator, who will negotiate a settlement with your creditors. If the creditors agree, you may pay back less than the full amount owing.
Returning to our example above, you may offer a consumer proposal where you repay half of the debts, or $30,000, for payments of $500 per month for 60 months. In this example your payments would be half of what you would pay in a debt management plan.
In addition, if more than half of the dollar value of your creditors agree, all unsecured creditors are required to accept your consumer proposal, so you have certainty that a consumer proposal is a solution for all of your debts.
You best solution is to talk to a trustee in bankruptcy. They can explain the costs to you of both options based on your unique circumstances and help you choose which option is best for you.
To discuss your options, contact a trustee today.