Debt Management Program in Cambridge

NLP_2392A Debt Management Program is one option available to help you with your debts.

Most debt management plans are filed through not-for-profit credit counselling groups.  A local agency in the Cambridge area that offers this service is the Mosaic counselling & family services group who are based out of Kitchener.

With a debt management plan through a not-for-profit agency, there’s usually no up front fees or costs to filing with them that you have to incur.  Some agencies may charge a small administration fee or ask you for a voluntary donation to help with the administration costs.

A meeting with a credit counsellor usually starts with them gathering information on your situation so that they can understand what options you have and if you’re a likely candidate for their programs.  They will also provide you with information on:

However, to actually meet with a credit counsellor, in most circumstances they ask that you first attend a clinic/workshop that they hold on a weekly basis.

How does a debt management plan work?

In most cases the credit counsellors will attempt to contact the creditors on your behalf and set up a plan whereby you offer to pay your outstanding balance, in full, over a four year term if the creditors agree in return to stop charging further interest on the accounts.  In some situations they might be able to negotiate a payment over five years, but most are done over four.

So the math is quite simple.  If you owe $40,000 in unsecured debt (credit cards, credit lines, over drafts etc), then divide $40,000 by 48 months and you have your monthly payment.  In this example it would be approximately $833 per month for 48 months.

If this payment is affordable, and you’re confident you can commit to it over the 4 year term, then it’s a good place to start on the road to financial recovery.

A debt management plan is not legally binding on creditors like a consumer proposal is, but as long as you stay up to date with your payments and pay on time each month most creditors will respect the plan/offer you’ve made as ultimately they’ll be getting all their money back upon the successful completion of the payments.

Any default in payments though and the plan could collapse leaving you back at square one with no legal protection from the creditors.

Normally a note will be put on your credit report to indicate you filed a debt management plan and will remain there for 2 years after you’ve completed your payments (so 6 years in most cases).

I’m not sure I can afford it?

If the monthly payment on a credit counselling program is too high to commit to, then perhaps you’ll need to explore other options too such as a Consumer Proposal.

A Consumer Proposal takes the concept of credit counselling one step further and not only eliminates interest, but also allows you to offer a reduction in the principle debt owed to the creditors.

Where a consumer proposal differs to a debt management plan is, a consumer proposal;

  • Allows you up to 5 years to pay your proposal.
  • Payments can be flexible, based on your budget and staggered over the course of the proposal.
  • Is binding on all creditors is a 51% majority of your creditors agree to your proposal (you don’t necessarily need every creditor to agree to it in order for it to be legally binding on all creditors).
  • Offers you the same legal protection you’d receive from a bankruptcy (creditors cannot call you, send letters to you or attempt to take any legal action against you).

For more information on debt options such as a debt management plan or consumer proposal, please call our office at (519) 622 3773 or fill out our contact form and email me your questions.


Howard has worked in our Cambridge office for many years helping Cambridge residents find solutions for debt problems. As a licensed trustee in bankruptcy Howard is able to explain all your options and find a solution that works for you.

Howard Hayes – who has written posts on Bankruptcy Cambridge: The Insider's View from Howard Hayes.

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