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Consumer Proposals

Consumer Proposal vs Debt Management Plan

Consumer proposal vs. debt management plan: is there really a difference between the two? We clear the confusion!

There are certainly different ways to deal with debt, just as there are many different types of organizations that promote debt consolidations, consumer proposals and debt management plans. This can become confusing because different programs offer different protections, while some actually offer no protection at all.

Debt Consolidation and Debt Management Plans

When most people think of debt consolidation they think of a bank giving them a loan to pay off their debt, consolidating it into one single payment. These days it is increasingly common for financial consulting companies, debt management/settlement companies and even Trustees to promote their services as debt consolidation.

In almost all cases, creditors will agree to forgo interest or except a smaller monthly payment. However, this means, that while you may have consolidated your debts into a single payment, you have not exactly consolidated your debt because you still owe all of your creditors the full amount of their debt principal.

Generally speaking, when dealing with debt management/settlement companies, what they promote as a debt consolidation, or debt management plan, ends up being one of two things:

A Consumer Proposal – in this instance, the debt management company will charge you a fee to review your finances and then refer you to a Licensed Insolvency Trustee, who is the only professional who can legally administer a Consumer Proposal. A Consumer Proposal will enable you to make a single monthly payment, typically stops collection actions of unsecured creditors, eliminates interest and will significantly reduce the total amount of debt you must pay.

A debt management plan – in this instance, you pay a company monthly with a promise that they will disperse money to your creditors monthly, or they will hold your money to make settlements with creditors once enough money has been accumulated. Buyer beware:  Service Canada, in addition to a number of other government agencies, has issued numerous warnings about debt management and debt settlement companies specifically warning against paying upfront fees and long term contract costs. They have no statutory authority to stop collection actions, to freeze interest on unsecured debts or to bring a global resolution to your debts. Check these warnings out here: https://news.ontario.ca/mgs/en/2014/01/consumer-alert-debt-settlement.html

Consumer proposal vs. debt management plan – these are only two of the many options available to individuals struggling with debt. For a complimentary review of your finances, and a discussion of options to deal with your debt, you can count on us. We charge no upfront fees and should you choose to file a consumer proposal we have federally Licensed Trustees on our team to assist you through the process!


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    We are chartered professional accountants, licensed insolvency trustees and proposal administrators. With deep and substantial knowledge and experience in finance, accounting, taxation, bankruptcy and debt- restructuring, we can help you address and resolve your financial troubles. We can stop harassing phone calls, wage garnishments and collection law suits, while implementing a solution that addresses creditors’ concerns, with monthly payments you can afford. Book a free consultation today.

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