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📅 Last Updated: December 7, 2023
✏️ Written By Priyanka Correia, BComm
🕵️ Fact-Checked by Caitlin Wood, BA

Do you have a lot of debt? Are your monthly payments too high? If your debt is getting out of hand and you feel like you can’t control it anymore, enrolling in a debt management program (DMP) could be the solution you’ve been looking for. 

But we also completely agree that the unknown is scary. Having some basic knowledge about the inner workings of a debt management program will allow you to take full advantage of it and hopefully achieve all your goals. 

This is why we want you to know what to expect when enrolled in a debt consolidation program before you make your final decision.

What Is A Debt Management Program (DMP)? 

Also known as a debt consolidation program, a debt management program (DMP) is an informal proposal that is administered by a credit counsellor. The goal of a debt consolidation program is to consolidate your debt and reduce your payments into one affordable monthly payment. 

However, it is important to remember that the goal of a debt consolidation program is not to eliminate debt. It simply reforms it so that it is more affordable. In some cases, however, it may eliminate some of the debt you owe or waive any fees or accruing interest. 

Debt Consolidation Program vs. Debt Consolidation Loan

A debt consolidation program, also known as a debt management program (DMP), should not be confused with a debt consolidation loan. While a DMP is an informal proposal that is administered through a credit counsellor, a debt consolidation loan is simply a loan that you apply for with a lender to consolidate your debts. 

Here are some of the key differences between a debt consolidation program and a debt consolidation loan. 

Debt Consolidation Program Debt Consolidation Loan
ProcessYour credit counsellor will negotiate a debt consolidation plan with your creditors. You must apply for a loan with a lender. 
LegalityWhile your creditors are not legally bound to the contract, they agree to the proposal set by your credit counsellor. You’ll be bound to your new loan. Any missed payments can affect your credit. 
InterestDepending on your DMP agreement, your interest charges may be waived. Your lender will charge you interest on your loan. 
Eligibility RequirementsYou do not require anything to enter a debt consolidation program. However, you must be able to afford the debt consolidation payments.To qualify for a debt consolidation loan, your lender will have certain requirements regarding your credit score, income and debt level. 

How Does A Debt Consolidation Program Work?

Unlike more drastic forms of debt relief like a consumer proposal or bankruptcy, a debt consolidation program is not a legal process. Instead of working with a Licensed Insolvency Trustee, you’ll work with a credit counsellor who will help you through the entire process. Remember to make sure your credit counsellor is part of the provincial or national association.

The purpose of a debt consolidation program is to consolidate your eligible debts and pay them over up to 5 years. Generally, when entering a debt consolidation program you can expect the following: 

Meeting The Credit Counsellor

Your main goal when meeting with your credit counsellor is to provide them with as much information about your finances as possible. The more information they have, the better they’ll be able to help you. Your credit counsellor will require information regarding your income, expenses and debts. So be sure to bring along your bank statements and other financial records. With it, your counsellor will: 

  • Figure out exactly how much debt you have.
  • Create a budget that covers all your debt, expenses, and income.
  • Negotiate with your creditors and agree on a monthly payment.
  • Provide you with the tools and knowledge to deal with any future financial issues.

The Negotiation

The credit counsellor who you work with will negotiate, on your behalf, with your creditors and lenders in hopes of:

  • Reducing your interest rates and/or eliminating any penalties you might incur or have already incurred. 
  • Extending the time required to pay off the debt (up to five years).

This way you can continue to afford all the necessities of your life while working toward your goal of being debt-free. 

The Payment

If your creditors agree to your credit counsellor’s proposal, you’ll begin making payments. These payments are paid to your credit counsellor who will then distribute the payment to your creditors.

Once you’ve completed the program, you’ll be debt-free. However, the DMP will be recorded in your credit report and will stay on it for 2 years after you’re done with the program. 

What Types Of Debt Can Be Consolidated With A Debt Consolidation Program?

A debt consolidation program is a great option for many consumers who struggle to keep up with the cost of being in debt. With that being said, not all types of debt can be included. 

Generally speaking, only unsecured debts can be consolidated such as credit card debt, personal loans, and unsecured lines of credit. However, in some cases, you may be able to add your secured debt. 

  • Credit Card DebtCredit card debt is unsecured which means it is eligible to be included in a debt consolidation program. Credit card debt is one of the most common reasons why consumers choose this form of debt relief.
  • Unsecured Personal Loan Debt – Unsecured personal loans, meaning when you originally took out the loan you didn’t have to put up any form for collateral like a vehicle, can also be included in a debt consolidation program.
  • Auto Repossession Debt – If your vehicle has been repossessed because you were unable to keep up with the payments, you may be able to include that debt.
  • Non-Government Student Loan Debt – If you have private or non-government-insured student loan debt that is causing you too much financial stress, entering a debt consolidation program might be a good option for you.
  • Past-Due Cell Phone/Utility Bills – If you have a past-due cell phone or utility bill and you’re no longer using the same service. It’s possible that you can include that debt in a debt consolidation program
  • Medical Bill Debt – Not all medical bills are eligible to be consolidated, but some are. If this is the main reason why you are considering a debt consolidation program, we recommend that you seek the advice of a credit counsellor first.

Where Can I Find A Debt Management Program (DMP) Near Me? 

You can enter a debt management program by contacting a credit counselling agency. To help you find an agency with qualified counsellors who are in good standing with your provincial association, check out the following associations: 

Consolidated Credit

If you’re looking for a credit counselling agency in Ontario, Quebec, Alberta or British Columbia, check out Consolidated Credit. They have multiple office locations you can visit in each province. 

Here’s a few locations you can visit in person: 


  • 10180, 101 St. North West, Suite 3400, Edmonton, Canada T5J 3S4
  • 900-903 8th Ave SW Calgary, AB T2P 0P7


  • 1250 René Lévesque Boulevard West Suite 2200, Montreal, Quebec H3B 4W8

British Columbia

  • MNP Tower Centre 1021 West Hastings Street, 9th Floor, Vancouver, BC V6E OC3


  • 201 Portage Avenue, 18th Floor, Winnipeg, MB R3B 3K6
  • 151 Yonge St., 11th Floor, Toronto, Ontario M5C 2W7

Can I Enter A Debt Consolidation Program With Bad Credit?

Yes, if you have bad credit you can enter into a debt consolidation program with the help of a credit counsellor. A debt consolidation or management program is actually a great alternative for anyone who cannot get approved for a debt consolidation loan because they have bad credit. 

No Credit Check Needed

As a debt consolidation program does not require borrowing money, your credit won’t be checked and won’t play a factor in the process. Your credit counsellor may want to check your credit score for a complete picture of your finances, but it will be a soft pull and won’t affect your score.

What Are The Benefits Of A Debt Consolidation Program?

A debt consolidation program is a great option for those who can’t afford to keep up with their monthly payments. It will allow you to work toward paying off your debts and regaining some control over your financial life. Let’s look at some of the benefits of joining a debt consolidation program.

Reduce Your Monthly Debt Payments

Depending on your financial situation and how much debt you have, you could see a reduction in your monthly payments by as much as 50%. However, do remember that doesn’t mean they’ve eliminated the debt you owe but rather had it reduced by extending your payment term. Similarly, your credit counsellor may have been able to cut or reduce the interest you owe, meaning more of your money will be going toward paying off the principal rather than the interest that is accumulating.

One Easy And Affordable Payment

Another advantage of a debt consolidation program is that you’ll only have to worry about making one monthly payment (for your eligible debts). You’ll make your payment to the credit counsellor who you’re working with and they will distribute the money to your creditors accordingly. 

Certain Penalties And Fees Are Waived

Once you enroll in a debt consolidation program your credit counsellor takes control of your debt and negotiates with your creditors on your behalf. Your counsellor might be able to get certain penalties removed, fees reduced, or charges waived. Certain fees may have to be paid no matter what, but it never hurts to have a professional working to help you get the best deal possible.

Debt Is Paid Off Quicker

Because your counsellor works hard to consolidate your debt and get reductions on fees and interest for you. This allows more of your money to go toward paying off the principal of your debt instead of the interest that your debt accumulates. This in turn will allow you to pay off your debt quicker and at a lower cost. 

Avoid Black Marks On Your Credit History

One of the best parts of a debt consolidation program is that you’ll be avoiding a more serious financial issue, like bankruptcy. Bankruptcy is often the best choice for certain people but if it can be avoided, it should be. With a debt consolidation program, you’re still paying off your unsecured eligible debt in full which means your credit history won’t have the big black mark of bankruptcy on it. 

The Disadvantages Of A Debt Consolidation Program

As with anything in life, everything has its advantages and disadvantages. A debt consolidation program is no exception. This is why it is important to understand what debt consolidation is and if it is the right choice for your situation. Here we’ll go over the disadvantages so you can make an informed decision.

Voluntary Program 

A debt consolidation program is voluntary and therefore not legally binding. This means that your creditors don’t have to agree to your proposal.

Creditors Can Still Contact You 

You won’t have any protection from your creditors and they can still contact you or send collection agencies after you.

No New Credit

You will not be able to open any new lines of credit or apply for new credit cards; if you do it could hurt the success of your program. Before you decide to start a debt consolidation program make sure you won’t need any kind of new credit.

Delayed Start 

Your debt consolidation program might not take effect for a couple of months. This means that your creditors won’t receive your payments right away. You should continue to make regular payments on your bills so that you won’t miss any payments.

Cost Of A Debt Consolidation Program

Depending on the credit counselling agency you work with, the fees for their services will vary. To ensure a debt consolidation program is worth your while, be sure to calculate how much it costs versus how much you’d save in interest from consolidating. In general, you can expect your credit counsellor to charge you the following fees: 

  • Initial set-up fee
  • Monthly maintenance fee
  • Application fee
  • Membership fee
  • Upfront fee or fee for each creditor

If you’re unable to afford their service, you can ask if they can reduce the fees. Some credit counselling agencies adjust the fees according to your financial circumstances. 

How Do You Know If You Need Debt Relief?

When it comes to your debt, you are the expert. Feeling like you need help means that you probably do.

If you’re losing sleep because of your credit card bills. If you’re having trouble concentrating at work because of a predatory payday lender. Or, if you feel like your life is on hold because your debt levels just keep getting bigger. We want you to know that you’re not alone and there is help waiting for you.

Help is available to all Canadians who are currently dealing with debt and we want you to take advantage of that help so you can start living the debt free life you deserve. Give yourself the best possible chance for a brighter financial future by doing some research and finding a debt management program that’s the right fit for you.

Getting The Debt Relief You Need

The sooner you enroll in a debt consolidation program the sooner your new debt-free life can start. Taking that first step and asking for help can be scary but we know that once you start you’ll be so happy you did. Becoming debt-free is a journey, one that will take a lot of hard work and effort from you. If you stick to the program that your credit counsellor creates for you, we know you’ll be able to achieve all your goals. The most important thing for you to do is learn from this experience, listen to your counsellor and work hard to get rid of bad financial habits and create new good ones.

Debt Consolidation Program FAQs

How long is a debt consolidation program?

A debt consolidation program (or a debt management program) can last up to a maximum of 5 years. However, the length of your program will vary according to your debt level and overall finances.

Are there any fees associated with a debt consolidation program?

The fee charged by your credit counsellor can vary greatly depending on who you work it. Before working with any credit counselling agency be sure to ask if they charge for the first consultation and what the fees for their services are.

What happens if my creditors do not agree to the DMP?

If a creditor does not agree to the proposal laid out in your debt management program, you’ll simply revert to the original conditions of the loan.

Caitlin Wood Priyanka Correia Lisa Rennie Bryan Daly Cris Ravazzano Margaret Johnson Kale Havervold Liz Enriquez Sean Cooper Veronica Ott Corrina Murdoch Chrissy Kapralos

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