A debt management plan is a voluntary repayment plan set up through a non-profit credit counselling agency, where you usually repay the full principal with reduced or waived interest. A consumer proposal is a legally binding agreement, filed by a Licensed Insolvency Trustee, to repay a portion of what you owe over a term that cannot exceed five years. The quick test: if you can repay the full amount given some interest relief, a DMP may fit. If you cannot, a consumer proposal may be worth understanding.
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A consumer proposal is administered by a Licensed Insolvency Trustee under the federal Bankruptcy and Insolvency Act, and only a Licensed Insolvency Trustee can file one. A debt management plan is run by a non-profit credit counselling agency. DACL is neither a credit counsellor nor a Licensed Insolvency Trustee. We assess your situation, explain your options, and refer you to the right professional. Because we run neither route, we have no stake in which one you pick.
| Feature | Debt management plan | Consumer proposal |
|---|---|---|
| Who administers it | A non-profit credit counselling agency | A Licensed Insolvency Trustee, under the BIA |
| Legally binding? | No, it is voluntary | Yes, binding once accepted |
| What you repay | Usually the full principal | A portion of what you owe |
| Interest treatment | Often reduced or waived | Interest generally stops under the proposal |
| Typical duration | Roughly three to five years | Cannot exceed five years (60 months) (Source: OSB) |
| Debts included | Mostly unsecured consumer debt | A broad range of unsecured debts, subject to the rules |
| Credit-report impact | Removed two years after payoff (Source: FCAC) | Commonly R7; removed 3 years after payoff or 6 years after signing, whichever sooner (Source: FCAC) |
| Who it tends to suit | Can repay the full amount with interest relief | Cannot realistically repay the full amount |
| DACL's role | Assess and refer; not a credit counsellor | Assess and refer; not a Licensed Insolvency Trustee |
The biggest difference sits in two rows: who administers each, and whether you repay the full principal or a portion.
DACL is a debt assessment and referral service. We review your situation, explain how a DMP and a consumer proposal compare, and refer you to the right professional. We are not a credit counsellor, we are not a Licensed Insolvency Trustee, and we are not a lender. Where a DMP fits, we point you to a counselling agency. Where a proposal fits, we connect you with a trustee.
We've been helping Canadians since 2009. Here is what people ask most:
A DMP is a voluntary plan through a non-profit credit counselling agency where you usually repay the full principal with reduced interest. A consumer proposal is a legally binding agreement, filed by a Licensed Insolvency Trustee, to repay a portion over up to five years.
Generally yes. A DMP focuses on repaying the principal while reducing or waiving interest. A consumer proposal can settle the debt for a portion of what you owe.
Both are recorded, in different ways and for different periods. We can walk you through the current specifics for your situation. (Source: FCAC.)
No. A DMP is administered by a non-profit credit counselling agency, and a proposal can only be filed by a Licensed Insolvency Trustee. DACL assesses your situation and refers you to the right professional.
It depends on whether you can realistically repay the full amount and how much protection you need. A free assessment can help you see which tends to fit.
A short, free, confidential assessment is the simplest way to understand which route fits your situation. There is no cost and no pressure. You can also compare debt consolidation vs a consumer proposal or explore all debt-relief options.
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By Ishank · Debt Education & Content · Debt Advisors Canada
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General information, not legal, financial, or professional advice. Confirm your situation with a licensed professional. Debt Advisors Canada is not a Licensed Insolvency Trustee, a lender, or a government program.