What to consider
Creditor participation and interest relief vary. This is different from a loan.
Who can help?
Credit counselling organizations. This describes a provider type, not a confirmed DebtHelpers partner.
Questions to ask
- Which creditors will participate?
- What happens if I miss a payment?
KNOW THE DIFFERENCE
Different options. Different conversations.
Start with how each works, who provides it and what to ask.
Consolidation loan
New borrowing used to pay existing balances.
- Who to speak with
- A lender or appropriately authorized broker
- A useful question
- What is the total repayment, including interest and fees?
Debt management plan
A voluntary repayment arrangement with participating creditors.
- Who to speak with
- A credit counselling organization
- A useful question
- Which creditors participate, and what fees apply?
Consumer proposal
A formal proposal to creditors under insolvency law.
- Who to speak with
- A Licensed Insolvency Trustee
- A useful question
- What are the costs, obligations and alternatives in my situation?
MAKE THE CONVERSATION COUNT
Three things to have handy
- 1Creditor names and balances
- 2Payments you can sustain after essentials
- 3Any missed payments or collection notices
Ask what is included—and what stays outside the plan
A debt management plan is not new credit. A counsellor proposes an arrangement to participating creditors. You generally repay the debt in full; any interest relief depends on the arrangement. Ask for a list of included accounts and the payments you must still make separately.
Compare the plan with your actual monthly budget
Write down the proposed plan payment, all fees and any debts left outside it. Compare that total with the money available after essentials. Ask what happens if your income changes or you miss a payment before agreeing to the arrangement.
Will every creditor agree?
Not necessarily. Participation is voluntary. Ask the counselling organization how it handles a creditor that declines and how that affects your overall repayment plan.