Pros and Cons of a Debt Management Program

What Are The Pros and Cons of a Debt Management Program?

A debt management program (DMP) is one of the options available to people looking for ways to deal with their debt.

If you are struggling with debt, a DMP can help you to make payments more manageable, pay your debt off sooner, and get back into a financially healthy position.

A debt management program might be the right choice for you if you are finding it difficult to pay your debts, but there are both pros and cons to consider.

What Is a Debt Management Program?

A debt management program is an agreement between you and a third-party to negotiate a debt repayment plan with your creditors.

The third-party might be a not-for-profit credit counselling agency, or it could be a for-profit agency.

A credit counsellor will guide you through the advantages of a debt management plan and assess your financial situation to decide if you are eligible.

They can determine if your creditors are likely to accept a debt management plan and help you to work out what you can afford to pay each month.

Need Help Reviewing Your Financial Situation?
Contact a Licensed Trustee for a Free Debt Relief Evaluation

Call 877-879-4770


The Pros of a Debt Management Program

A debt management plan offers a range of benefits to people looking for debt solutions.

If you are considering a debt management program, these are some of the advantages that you can enjoy:


  • Pay off your debts in one manageable, monthly payment instead of having to keep on top of several different payments;
  • Potentially pay less interest by negotiating with creditors to lower or eliminate interest on your debts;
  • Get a clear plan that shows you how and when you will pay off your debts;
  • Be debt-free within five years, with the average time to complete a debt management plan being less than three years;
  • Receive support while you are paying off your plan, receiving helpful advice and assistance negotiating with your creditors to get the best deal, and even help with rebuilding your credit score;
  • Remove the stress of creditors coming after you and worrying about your debts so that you can have peace of mind;
  • Avoid some of the extremes that come with bankruptcy, such as having to surrender your home and car;
  • All of the debts included in the plan are erased from your credit report either two years after you finish the program or six years after you start it, whichever comes first, making it the fastest way to have a debt relief program removed from your credit report.


The Cons of a Debt Management Program

A debt management program may not be right for everyone.

There are some potential disadvantages that are also important to know before deciding if a debt management program is the right choice.

Some of the things to consider are:


  • It’s necessary for your creditors to agree with you and your credit counsellor that a debt management plan is right for you, and they might not think that it’s the best plan;
  • Your credit report is affected, with a note saying that you are making repayments on a debt management plan;
  • Your credit will be impacted for two years after the completion of the program or six years after it begins, depending on which one occurs first;
  • It’s essential that you are able to make a payment each month – if you are unable to do this, another option might be better, such as bankruptcy;
  • For-profit credit counselling companies can charge large fees, although there are non-profit options available too;
  • It might not be the right solution for you, depending on a range of factors. Your income, the amount you owe, and who your creditors are can all mean that it could be better to look at other options, including bankruptcy and a consumer proposal.


It’s possible that a debt management program may be able to help you if you owe money that you are having trouble repaying.

Consider both the pros and cons of choosing a debt management program before you decide if it is the best option for your situation.

Other possibilities are available to help you.

If you need more information about debt management programs, get in touch with Bankruptcy Canada.

You can call us at any time or get in touch via our evaluation form to arrange a callback.

We can help you to navigate the ins and outs of debt management programs and discuss whether it might be the right choice for you, as well as help you to explore other ways to deal with your debt.

Find Your Personal Debt Relief Solution

Licensed Insolvency Trustees are here to help. Get a free assessment of your options.

Discuss options to get out of debt with a trained & licensed debt relief professional.