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Is a Debt Management Program (DMP) Right For You?

debt management program (DMP)

A debt management program (DMP) can help you regain control of your finances. Sometimes we feel the strain on our personal finances as debt repayments fall past due. Even when making payments, the debt adds up.

If you can’t seem to get out of debt on your own, a debt management program (DMP) can be a valuable option. A DMP helps simplify debt repayment by consolidating your debts into one monthly payment. While you typically have to repay 100% of your debt in a DMP, you could reduce or eliminate your interest payments or fees.

What is a Debt Management Program (DMP)?

A DMP is an informal proposal made by a credit counsellor to your creditors on your behalf. Your credit counsellor can ask your creditors for alternative options, like a reduction on your interest fees or repayment extensions. However, a DMP does not reduce your overall debt, instead, it allows you to consolidate debt into one affordable monthly payment and pay it within a set time period.

How Does a Debt Management Program Work?

Before you sign up for a DMP, you’ll meet with a credit counsellor. The counsellor will assess your debt, help you create a budget, and provide tips for managing your debt. If you decide a DMP is right for you, your counsellor will work with your creditors to reduce your interest rate or extend your repayment terms.

If your creditors accept the DMP, it’s your job to make regular payments to your credit counsellor who will pay your creditors on your behalf. If some of your creditors don’t accept, you’ll have to work directly with that creditor to pay off your debt.

Who Qualifies For a Debt Management Plan?

You can speak to a credit counsellor to see if you qualify for a debt management plan. Your counsellor will assess your financial situation to determine if a DMP makes sense. Generally, this program is best for those struggling to keep up with their payments, but still find a way to do so.

What Debts Are Included in a Debt Management Plan?

A DMP typically doesn’t cover secured debts like a mortgage, car loan, or student loan. Some of the debts it does cover include:

  • Credit cards
  • Store credit cards
  • Personal lines of credit
  • Payday loans
  • Overdrafts

How Much Does a Debt Management Program Cost?

Before signing up for a DMP, ask your credit counsellor to explain the fees (as fees can vary between credit counselling companies). Examples of DMP fees include:

  • Initial set-up fees
  • Application fee
  • Monthly administration fee
  • Membership fee

If you can’t afford to pay these costs, ask your counsellor if they can reduce or eliminate them.

Pros and Cons of a DMP

As with any financial decision, a debt management plan has several pros and cons:


  • Simplified repayments through debt consolidation
  • Possible interest rate or fee reductions
  • Access to credit counsellors who can provide you with financial education and debt management tips


  • Loss of your credit cards once you pay them off
  • Refusals by creditors, since a DMP is voluntary
  • Altered credit reports, as a DMP stays on your record for two years after you pay your debts
  • Doesn’t include all debts (only unsecured debts)
  • You have to repay all of your debt

Alternatives to a Debt Management Program

Depending on where you are in your debt journey, alternative debt solutions might make more sense for you and your situation. You can speak to a Licensed Insolvency Trustee (LIT) to learn about the available debt solution options. A LIT is the only professional in Canada qualified to administer more formal debt relief solutions, such as:

Debt consolidation

Debt consolidation involves rolling up multiple debts into one monthly payment. The goal is to simplify the debt repayment process. One way to consolidate debt is with a debt consolidation loan. Ideally, you’ll find a loan big enough to pay off your other debts, and with a lower interest rate than you’re currently paying. Typically, you need a strong credit card to secure a debt consolidation loan.

Consumer Proposal

A Consumer Proposal is a formal process where you work with creditors and alter the terms of your debt repayment. you work with an LIT to create an offer for your creditors to pay a percentage of what you owe, extend the time till you have to repay your debt, or both. If your Proposal is accepted, you must adhere to the new conditions.


Filing for Bankruptcy is the legal means of discharging your debt. It’s also a scary consideration for most people, as many of your assets are sold to raise money to repay back your creditors. However, the purpose of Bankruptcy is to provide a second chance to honest Canadians who are struggling financially. If you’re dealing with extreme financial stress and can’t pay your bills, Bankruptcy may provide a sense of relief. With a fresh start, you can build a credit score again over time.

Is a Debt Management Plan Right For You?

If you’re struggling with debt but still managing to make your monthly payment, you might consider a DMP. If your debt is more significant and you’re on the brink of insolvency, or you’re insolvent, speak to a LIT as soon as possible to figure out your options. Licensed Insolvency Trustees can assess your debt situation and recommend the best path forward. If you decide on a more formal debt solution like a Consumer Proposal or Bankruptcy, remember that a LIT is the only professional in Canada who can administer these processes.

For help with debt and personal financial management, call Allan Marshall & Associates today. For a free, no-obligation consultation, you can reach our office at 1-888-371-8900 or by completing our online contact form. We’re here to help – you don’t have to deal with your debt alone.