There are some pretty significant differences between a consumer proposal, offered by a Licensed Insolvency Trustee, and a debt management plan, which is offered by a credit counsellor or 'debt consultant.' The most important thing to note is that a consumer proposal is a legal agreement approved by and offering the protection of the courts, while a debt management plan is completely voluntary — your creditors are not obligated to participate and there is no protection against any legal action brought against you.
|Debt management plan
|Wage garnishments and legal action
|Collections calls, wage garnishments and threats of legal action stop when a consumer proposal is filed
|A creditor can continue to garnish wages and pursue legal action if they choose not to participate in the plan
|All debts included in the proposal are frozen and will not earn any additional interest
|It is up to each creditor to decide whether they want to freeze interest charges
|Filed by a Licensed Insolvency Trustee and approved by the courts
|Voluntary agreement that does not receive court approval
|Amount of debt repaid
|Usually pay only a portion of the total amount owed.
|Usually pay the total amount owed
|Single monthly payment is based on your financial situation.
|Single monthly payment
|No additional fees beyond your monthly payment.
|Additional fees are common and vary widely
|Do all creditors have to follow the plan?
|As long as most of the creditors vote to approve your consumer proposal, all creditors must abide by it
|Any creditor can decide not to participate in a debt management plan; you would have to pay full interest on the debt owed to them
|Maximum repayment period of 5 years
|Maximum repayment period of 4 to 5 years
|Must attend credit counselling
|Credit counselling is optional
|How will this affect my credit rating?
|Remains on your credit report for 3 years after the proposal is completed
|Remains on your credit report for 3 years after your debts are paid