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In Canada, a debt management program (also known as a debt consolidation) and a consumer proposal are two similar ways of agreeing with its creditors to change the terms of repayment of debt or even reduce debt repayment terms. this.
These two solutions may seem similar, making them difficult to differentiate for those seeking the best solution to their debt problems. But it is important to know that a debt management program (or debt consolidation) is not a synonym for the consumer proposal; these are two different options that are suitable for different debt situations.
The following chart should help you understand the obvious and subtle differences between the two solutions while allowing you to compare their advantages and disadvantages.
|Debt Management Program||Consumer proposal|
|Judicial obligations||DMP does not flow from legal obligations. Thus, your creditors are not obliged to cooperate. DMP is introduced following a voluntary agreement||A Consumer Proposal is a process of judicial obligations. More than half of your creditors must accept your proposal for approval|
|Interest||Your interest can be reduced or even frozen, depending on what your creditors accept||All your debts covered by your proposal are frozen, and interest stops accumulating|
|Recovery||Creditors who do not accept your agreement may continue to harass you for reimbursement||There is a “stay of decision” of registered to your accounts; it means that your creditors must stop any action against you|
|Goods||Generally, you keep your belongings||Generally, you keep your belongings|
|Amount reimbursed||Generally, you must repay your debt in full||You may have to repay only one part of your total debts|
|Payment schedule||In general, most DMPs require monthly payments. It depends on your program||A simple monthly payment based on your financial situation is the most common, but it can vary|
|Fresh||Depend on your program||Fees are introduced by the government and are usually included in your monthly payment|
|Creditors’ cooperation||Since the DGD is not under judicial obligation and your creditors are not obliged to participate, there is no way to deal with creditors who do not want to cooperate||If more than 50% (monetarily) of your creditors accept your proposal, the others must also cooperate|
|Repayment period||Must be paid back in 4 or 5 years||Must be paid back in 5 years|
|Financial follow||Optional financial follow-up||You must participate in a financial follow-up program|
|Credit rating||A DMP appears in your credit report for a period of 3 years after the repayment of your debts. You will have the rating of R7||A Consumer Proposal appears in your credit report for a period of 3 years after it is completed. You will have a rating of R7|
Effective debt relief
No matter which option you choose, it depends on you to complete the process effectively. Payday loan consolidation via www.PaydayLoanConsolidation.Net Best Site 🎡🎡🎡 can be of great benefit, allowing you to start from scratch and have a sense of success with your debts. Always make sure:
- Make all your payments on time and in full
- Attend your meetings with your trustee or advisor and be ready to work hard
- Adhere to all requirements associated with your program or proposal