What is debt management plan?
A debt management plan is a service provided by the Manitoba Association of Credit Counselors. These are non-profit agencies created to help individuals experiencing financial distress.
The concept behind a debt management plan is this: you can afford to make a monthly payment, you just need some help negotiating with your creditors and a little breathing space to get back on top of things.
Debt management plans are best suited to persons with a limited number of creditors (5 or less) and under $5,000 in debts. The advantages of a debt management plan are:
- Maximum period to repay is 4 years;
- Interest relief may be possible; and
- Some debt may be forgiven.
A debt management plan is not a legal procedure – it is a voluntary agreement between you and your creditors. As such, a debt management plan does not need to include all of your creditors, nor is it binding on your creditors. A debt management plan also does not have the ability to automatically stop a garnishment order – the creditor must agree to lift the garnishment.
If you think a debt management plan would work for you, look under Credit Counseling in the Yellow page for a credit counselor in your area.