Debt Management Plans

What is debt management plan?

A debt management plan is a service provided by the Ontario Association of Credit Counselors. These are non-profit agencies created to help individuals experiencing financial distress.

The concept behind a debt management plan is this: you can afford to make a monthly payment, you just need some help negotiating with your creditors and a little breathing space to get back on top of things.

Debt management plans are best suited to persons with a limited number of creditors (5 or less) and under $5,000 in debts. The advantages of a debt management plan are:

  • maximum period to repay is 4 years;
  • interest relief may be possible; and
  • some debt may be forgiven.

A debt management plan is not a legal procedure – it is a voluntary agreement between you and your creditors.

A debt management plan does not:

  • need to include all of your creditors,
  • require all your creditors to participate. Some can opt out.
  • have the ability to automatically stop a garnishment order – the creditor must agree to lift the garnishment.

Another alternative to bankruptcy that does include all of your unsecured debt and is legally binding on all your unsecured creditors (and as such stops wage garnishments and collection calls) is a consumer proposal.

Contact a bankruptcy Hamilton trustee to see if a Consumer Proposal would be a better option for you.

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