Debt Management

Contacting your creditors through a debt management program

What does it mean?

A debt management program is a service you can register for through a not-for-profit organization or a private company. By using this service, you authorize a counsellor to speak to creditors on your behalf in order to make special arrangements with them regarding your payments. In most cases, you will have to make one regular payment to your counsellor, who will look after dividing the agreed upon amounts among your creditors. You can not decide which creditors you want the organization or company to contact on your behalf as all unsecured creditors must be included in the Debt Management Program. Your budget will help you determine what your monthly payment should be to your creditors.

How much does it cost?

Depending on the province or territory in which you live and the organization you consult, this service may be free or may involve a fee. The fees vary based on the services offered. It may be a fixed fee, an hourly rate, a percentage of the payments made, or a combination of all three. Contact the organizations or the companies offering these services to find out how much they charge. Ask them to mail you a fee schedule. Before signing a contract, make sure it includes all the services discussed and the exact costs you will have to pay. It is a good idea to get a quote from more than one service before making your decision.

Things to do and to remember…

In order to access this type of service, you must contact a debt counsellor.

Advantages and disadvantages of contacting your creditors through a debt management program


Some creditors endorse this type of service and your counsellor may therefore achieve better results than if you contact your creditors yourself. Your counsellor may, in some cases, be able to have interest charges reduced or waived and payment terms and amounts modified.

While you are taking part in a debt management program, your creditors will contact your counsellor if any problems arise. This does not, however, prevent you from getting in touch with them directly if you foresee any problems or are able to repay them as a result of additional income.

It saves you a lot of time (and possibly stress), as the counsellor makes all the phone calls and does all the negotiating.


This option is a voluntary arrangement between you and your creditors; as a result, there is nothing stopping them from taking legal action against you or from terminating any arrangement you have since they are not legally obligated to help you. Nonetheless, most creditors will agree to help you since their ultimate goal is to recover as much of the money owing to them as they can.

You have to agree with the organization not to incur further debt while on this program.

In most cases you will lose access to your accounts and the credit granting organization has the ability to downgrade your account on the credit bureau to an R7 which means that you have entered into voluntary repayment of debt or court appointed payment plans.