If your bank or credit union isn't able to help you consolidate your debts and other debt consolidation options like borrowing money don’t work for you, then a Debt Management Program (DMP) might be right for your situation. People also call a DMP a Debt Repayment Plan or Debt Management Plan. They all refer to the same thing. To some, a Debt Management Program sounds like a loan or a government program. While it's similar to each in some ways, it's actually something a little different. Years ago, many provincial governments offered a similar debt management plan, but all of them stopped providing those services. The main reason is because the Debt Management Program combined with the support and services that non-profit credit counselling agencies offer has been much more effective in providing assistance to Canadians struggling with debt.
A debt management plan gets you out of debt by consolidating all of your credit card payments (and many other unsecured debts too) into one monthly payment that you can afford based on your budget. You then make one monthly payment to a licensed consumer credit counselling service like ours, and we disburse the funds to your various creditors every month. Interest rates on your debts are typically reduced to zero. For creditors who won't completely eliminate interest, your interest rate is usually substantially reduced.
Your creditors have to agree to allow you to go onto a DMP, but they typically will if one of our accredited Credit Counsellors believes that this program is the right fit for your situation. If you decide to enroll in a Debt Management Program, all of your credit cards and unsecured debt will be paid off within 5 years. However, most people pay off their program as fast as they can, so the average program is completed in less than 3 years. There is no penalty if you can pay your program off faster.
Once you have completed your Debt Management Program, you can begin to rebuild your credit. We have a credit rebuilding program that can help you to re-establish credit as quickly as possible and buy a home or vehicle if that is something you'd like to do. One of the nice things about a DMP is that it's the only formal debt repayment program in Canada that is completely private and has no permanent record. All records of the program and debts paid off through the program are erased from your credit report 2 years after you complete the program.
You can learn more about our Debt Management Program by contacting us and asking any questions you may have. You never know, this program may be the right fit for you, or there may be other options that could possibly fit your financial situation better. If you would like to discuss your situation in more detail, give us a call at 1-855-232-4888 to speak with one of our Credit Counsellors. Talking to them is always free and completely confidential.