Debt Management Plans Ontario

What is debt management plan?

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

In a debt management plan your credit counsellor will contact your creditors and work out a plan. You then give money to your credit counsellor each month, and they disburse the money to each of your creditors.

Debt management plans are best suited to persons with a limited number of creditors (5 or less) and under $15,000 in debts, although they can be used for larger debts. The advantages of a debt management plan are:

	Maximum period to repay is 5 years;
	Interest relief may be possible; and
	Once accepted, creditors stop calling

A debt management plan is not a legal procedure - it is a voluntary agreement between you and your creditors. As such, a debt management plan does not need to include all of your creditors, nor is it binding on your creditors. A debt management plan also does not have the ability to automatically stop a garnishment order - the creditor must agree to lift the garnishment.

Because a debt management plan is not binding on all creditors, if one creditor does not accept the plan, the entire plan may fail. In that case a consumer proposal may be a better option.

If you think a debt management plan would work for you, look under Credit Counseling in the Yellow pages or check moneyproblems.ca for an credit counsellor in your area.