Debt Management Program (DMP)

A Debt Management Program (DMP) is a structured repayment plan administered by a non-profit credit counselling agency. You repay 100% of your principal debt, but the agency negotiates reduced or eliminated interest with your creditors. You make a single monthly payment to the agency, which distributes funds to your creditors on your behalf.

Last updated: March 2026

Overview

A Debt Management Program (DMP) is a voluntary repayment plan set up through a non-profit credit counselling agency. Unlike a consumer proposal or bankruptcy, a DMP is not a legal proceeding under the Bankruptcy and Insolvency Act — it is an informal arrangement between you, the agency, and your creditors. You agree to repay 100% of your principal debt, while the agency negotiates with creditors to reduce or waive interest charges and stop late fees.

With a DMP, you make a single consolidated monthly payment to the credit counselling agency, which then distributes the funds to your creditors according to the agreed-upon terms. Most DMPs are completed within 3 to 5 years. The program provides structure, accountability, and the benefit of reduced interest, but it does not reduce the amount of principal you owe.

DMPs work well for people who can afford to repay their debts in full but are struggling with high interest rates that prevent them from making meaningful progress on their balances. Since creditors participate voluntarily, not all creditors agree to the terms. However, most major Canadian banks and credit card companies have established arrangements with accredited credit counselling agencies and routinely participate in DMPs.

Eligibility Requirements

You may qualify if:

+You have unsecured debts (primarily credit cards and personal loans) that you want to repay in full
+You have stable income sufficient to make the consolidated monthly payment
+You are looking for help with high interest rates rather than reducing the amount owed
+You can commit to a 3 to 5 year repayment plan
+You are willing to stop using credit cards enrolled in the program
+You have completed a financial assessment with a credit counselling agency
+Your debts are primarily with creditors that participate in DMP arrangements (most major banks and credit card issuers do)
+You want a structured program with accountability and support
+You are willing to make consistent, on-time monthly payments for the duration of the program
+Your total unsecured debt is manageable with reduced interest — typically $10,000 to $40,000

This may not be right if:

-You cannot afford to repay 100% of your principal debt even with reduced interest
-You need legal protection from creditors (wage garnishments, lawsuits) — a DMP does not provide a stay of proceedings
-Your debts include significant secured debt (mortgage, car loans) — DMPs only cover unsecured debts
-You have debts with creditors who refuse to participate in the DMP
-You are unable to commit to consistent monthly payments for 3 to 5 years

How the Process Works

Complete a financial assessment with a credit counselling agency

A certified credit counsellor reviews your income, expenses, debts, and assets to determine whether a DMP is appropriate. This assessment is typically free and confidential. The counsellor will explain all available options before recommending a DMP.

Development of the DMP proposal

If a DMP is appropriate, the counsellor calculates a monthly payment you can afford and prepares a proposal to send to your creditors. The proposal typically requests interest rate reductions or elimination and an end to late fees.

Creditor notification and acceptance

The agency contacts each creditor individually to present the DMP terms. Each creditor decides voluntarily whether to participate. Most major Canadian banks and credit card companies participate in DMPs with accredited agencies, though terms vary by creditor.

Begin making monthly payments

You make a single monthly payment to the credit counselling agency. The agency distributes funds to your creditors according to the agreed terms. You typically set up automatic payments to ensure consistency.

Close or freeze enrolled credit accounts

Credit accounts enrolled in the DMP are typically closed or frozen. You cannot use these credit cards or lines of credit while on the program. This helps prevent you from accumulating new debt during the repayment period.

Ongoing monitoring and support

The credit counselling agency monitors your payments and provides ongoing support throughout the program. If your financial situation changes, the counsellor can help you adjust the plan or explore other options.

Program completion and certificate

Once all debts enrolled in the DMP are repaid in full, the agency provides confirmation of completion. The R7 notation on your credit report remains for 2 to 3 years after completion, after which it is removed.

Costs and Fees

DMP fees are regulated or set by the credit counselling agency and are typically modest. Most agencies charge a small monthly administration fee. Because you are repaying 100% of your principal, the main financial benefit is the interest savings.

Item	Estimated Amount
Initial setup fee	$0 - $75 (varies by agency; many waive this)
Monthly administration fee	$25 - $50 per month (some provinces cap this amount)
Interest rate on enrolled debts	0% - 5% (reduced from original rates, varies by creditor agreement)
Typical monthly payment	$300 - $800/month depending on total debt

Timeline

Most DMPs are designed to be completed within 3 to 5 years (36 to 60 months). The exact length depends on the total debt enrolled and the monthly payment amount you can afford. Unlike a consumer proposal, there is no maximum statutory timeframe.

Smaller debt enrolled ($10,000 - $15,000)

24 - 36 months

Moderate debt enrolled ($15,000 - $30,000)

36 - 48 months

Larger debt enrolled ($30,000 - $40,000+)

48 - 60 months

Credit Impact

Credit Rating

Duration on Report

2 to 3 years after completion of the program

Enrolling in a DMP results in an R7 notation on your credit report for each account included in the program. This notation indicates that you are repaying your debts through a special arrangement. The R7 remains on your report for 2 to 3 years after you complete the DMP. While the R7 will make it more difficult to obtain new credit during the program, the impact is less severe than a bankruptcy (R9) and comparable to a consumer proposal (also R7).

Pros and Cons

Advantages

+Reduced or eliminated interest charges save you significant money over the repayment period
+Single monthly payment simplifies debt management
+You repay 100% of your principal — many people find this important for their sense of financial integrity
+Ongoing support and accountability from a certified credit counsellor
+No formal insolvency filing — a DMP is not recorded as a legal proceeding
+Late fees and penalties are typically waived by participating creditors

Disadvantages

-Does not reduce the amount of principal owed — you repay 100% of what you borrowed
-No legal protection from creditors — a DMP does not provide an automatic stay of proceedings
-Creditor participation is voluntary — some creditors may refuse to participate or may not offer favourable terms
-Your enrolled credit accounts are closed or frozen during the program
-R7 notation on your credit report while in the program and for 2-3 years after completion
-If you cannot maintain payments, the program may be cancelled and creditors will reinstate original interest rates and pursue collection

Frequently Asked Questions

What is the difference between a DMP and debt consolidation?

With a DMP, you do not take out a new loan. Instead, a credit counselling agency negotiates reduced interest rates with your creditors and you make a single payment to the agency, which distributes funds to creditors. With debt consolidation, you take out a new loan to pay off existing debts. A DMP does not require a credit check or collateral, while a consolidation loan does.

Can I include all my debts in a DMP?

DMPs typically include unsecured debts such as credit cards, personal loans, and lines of credit. Secured debts (mortgage, car loans), student loans, and CRA tax debts are generally not included. Additionally, each creditor decides whether to participate, so not all unsecured debts may be covered.

What happens if I miss a payment on my DMP?

Missing payments on a DMP can jeopardize the entire program. Most creditors will allow one or two missed payments before withdrawing from the arrangement, but policies vary. If a creditor withdraws, they can reinstate the original interest rate and resume collection activity. Contact your credit counselling agency immediately if you anticipate difficulty making a payment.

Will a DMP stop collection calls?

A DMP does not provide a legal stay of proceedings, so creditors are not legally required to stop collection calls. However, in practice, most creditors that agree to participate in a DMP will stop collection activity once the program is in place and payments are being received. If a creditor continues to contact you, your credit counselling agency can intervene on your behalf.

How is a DMP different from a consumer proposal?

A consumer proposal is a legal process under the BIA that reduces the amount you owe (typically to 30-70% of the total) and provides an automatic stay of proceedings. A DMP requires you to repay 100% of the principal but with reduced interest. A DMP has no legal protections, while a consumer proposal binds all unsecured creditors once a majority accepts. If you cannot afford to repay the full principal, a consumer proposal is likely the more appropriate option.

Do I need to close my credit cards when entering a DMP?

Yes, in most cases. Creditors typically require that the accounts included in the DMP be closed or frozen as a condition of participating. This prevents you from adding to the balances while you are repaying them. You may be able to keep one credit card that is not included in the DMP for emergencies, depending on the agency and your creditors' requirements.

Not sure if this is right for you?

Take our free quiz to get personalized recommendations based on your specific situation.

Take the Quiz Compare All Options