Types of Debt You Can Consolidate With a Debt Management Program
When your debt become too much to handle, it’s often in your best interest to seek help. Deciding which kind of help you need can be complicated, especially when there are so many great options out there. Depending on the types of debt you have and your current financial situation, a debt management program (DMP) might be exactly what you need to tackle your debt and get back on track. Let’s take a more detailed look at how a debt management program works.
Interested in the difference between a DMP and a Consumer Proposal? Click here.
What to Expect
Unlike more drastic forms of debt relief like a consumer proposal or bankruptcy, a debt management program is not a legal process. Instead of working with a lawyer or a licensed insolvency trustee, you’ll work with a certified credit counsellor who will help you through the entire process. 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:
- Determine exactly how much money you owe and to who.
- Create a personalized budget to help you keep on track.
- Negotiate with your creditors in hopes of coming to an agreement about the repayment of your debts.
The purpose of a debt management program is to consolidate your eligible debts into a more manageable monthly payment. 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. This way you can continue to afford all the necessities of your life while working toward your goal of being debt free. In most cases, debtors are able to get out debt quicker and save money on interest charges while making more manageable monthly payments.
For more information on what to expect when enrolled in a DMP, read this.
What Types of Debt can be Consolidated with a Debt Management Program?
A debt management 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 in a debt management program (are you eligible to enter a DMP? Click here).
Seeking the help of a professional and deciding to enter a debt management program are decisions we know you won’t take lightly, this is why we think it so important that you know what to expect before you make any final decisions. For your reference and to help you make sure you’re making the right choice, here is a comprehensive list of the debts that can be consolidated with a debt management program.
Credit Card Debt
Credit card debt is unsecured which means it is eligible to be included in a debt management program. In fact, credit card debt is one of the most common reasons why consumers choose this form of debt relief.
Retail Store Credit Card Debt
Similar to other credit cards, retail credit cards are also eligible to be included in a debt management program.
Unsecured Personal Loan Debt
Personal loans that are unsecured, 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 management program.
Credit Union Unsecured Loans and Credit Card Debt
If you received an unsecured loan from a credit union or have racked up too much credit card debt on a credit union credit card, it’s possible that both of these debts can be included in your debt management 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 in a debt management program.
Debt that has been created by a gas card is also eligible to be included in a debt management program.
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 management program might a good option for you.
Past Due Cell Phone Bills
If you have a past-due cell phone bill and you’re no longer using the same service, it’s possible that you can include that debt in a debt management program.
Past-Due Utility Bills
Similar to a past-due cell phone bill, a past-due utility bill for a service you no longer use are eligible to be included in a debt management program.
Medical Bill Debt
Not all medical bills are eligible to be consolidated with a debt management program but some are. If this is the main reason why you are considering a debt management program, we recommend that you seek the advice of a credit counsellor first.
Looking for more information on how debt consolidation can help you? Click here.
Making the Right Choice for You
One thing to keep in mind when you enter a debt management program is that your creditors and lenders are not required by law to cooperate with your credit counsellor. Therefore, the list above is meant to be used as a reference tool. It is possible that not all your unsecured debts can be included in your debt management program.
That being said, a debt management program is still a great option for many Canadian consumers who find themselves dealing with debt they can no longer afford. If you’re currently looking for relief from your unsecured debt, we can help by putting you in contact with a credit counsellor in your area.