DMP or Consumer Proposal? Compare The Payments.


Two very popular debt reduction programs available to Canadians include a debt management plan and a consumer proposal. While both involve negotiation with your creditors with the assistance of a third party (a trustee in the case of a consumer proposal and an accredited credit counselling agency for a debt management plan), a consumer proposal can provide more relief in terms of lower monthly payments in most situations.

To help you compare the potential cost and monthly payment options under each program, we have created a free, excel workbook for you to download: Debt Management Plan vs Consumer Proposal Debt Payment Calculator

Because a consumer proposal is a form of debt settlement, it is one of the fastest ways to pay off your debt. Here’s why:

  • you repay only a portion of what you owe;
  • you pay no interest or penalities.

A debt management plan only offers one of these financial benefits: relief from interest and penalties.

For this reason, if you are struggling with significant debt, a consumer proposal makes more sense.

Let’s look at an example. Here are the possible payments under both a debt management plan and a consumer proposal for someone carrying $53,300 in credit card and unsecured bank debt.

debt payment calculation DMP vs consumer proposal

What the monthly payments could look like in a Debt Management Plan and a Consumer Proposal on unsecured debt of $53,300.

Consumer proposals aren’t for everyone – they are designed for people that have more debt that they can deal with.  Consumer proposals provide an alternative to consolidation loans, credit counselling and even bankruptcy.

A word of warning – only a Licensed Insolvency Trustee may administer a consumer proposal on your behalf.  There are lots of companies advertising “deals to reduce you debt by up to 70%”, but unless they are trustees (you’ll know because trustees are required to tell you that they are trustees in their ads) they are going to have to refer you to a trustee in order to file a consumer proposal.  They won’t tell you this until after you have paid them some sort of fee, often hundreds, if not thousands of dollars. A Licensed Insolvency Trustee will never ask you for upfront fees.

So you can pay off your debt faster and lower your monthly payment with a consumer proposal, or you can keep doing what you are doing…  You decide, but at the very least, you owe it to yourself to look into a consumer proposal to see if it is right for you.

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