Debt Management in Canada

“If you are looking for a way to manage your debts, a debt management program is one solution. Your bankruptcy trustee can help you decide if it is the best solution.”

What is Debt Management

Debt management consolidates your unsecured debts into one monthly payment. It differs from debt consolidation in that it is not a new loan. Debt management programs are usually offered through not-for-profit credit counselling agencies. When you are choosing an agency, be sure and ask for references and confirm that they are accredited.

A Debt Management Plan

If a debt management plan is the right solution for you, your Local Bankruptcy Canada Trustee can recommend a reputable credit counsellor in your area. Contact a trustee today.During your credit counselling sessions, your credit counsellor will ask you about your budget. They will look at how much you owe, what your monthly debt payments and living expenses are and compare that to your income. With that information, they will help you design a debt repayment plan that they will negotiate with your creditors.

Once you sign up under a debt management program you will make one monthly payment to your counselling agency. They will forward these payments to your creditors based on an agreement they negotiate on your behalf. Their objectives will be first to bring your account current if you are behind on your payments and next to put you on a plan to repay your debts.

There are some things to consider about a debt management plan:

  • You must be able to repay all of your debt, although creditors may forgive interest an penalties.
  • A Debt Management Plan is usually completed within four years, although some plans may last for 5 to 7 years.
  • You can leave some creditors out of your plan, and not all creditors are required to participate.
  • Wage garnishments do not stop, unless your creditors agree.
  • You must complete all you payments under the terms of the agreement if any interest and penalties are to be forgiven.

Who Qualifies for a Debt Management Plan?

A debt management plan (DMP) or program is not for everyone. It is one option for dealing with your overdue or excessive debt. A DMP works best for:

  • You will be able to repay your debts in full, but need more time and perhaps a reduction in interest and penalties to do so.
  • Have credit card debt and other unsecured debt.
  • You have sufficient income to be able to meet your negotiated payment terms.
  • You do not qualify for a debt consolidation loan due to poor credit or lack of security.

Your Bankruptcy Trustee and Debt Management

A trustee in bankruptcy is a trained debt management expert. Knowing where you are is the first step in taking back control of your debts. Fill out our quick debt assessment form and a Local Bankruptcy Canada Trustee will review your situation and explain all the debt management options available to you.

Get started and find your solution today — talk to one of our Local Bankruptcy Canada Trustees about your situation.