Both
consumer proposal and management plan are good alternatives for the
debts issues. Both can provide you relief from the debt at their
places. But, still, there are some differences between them.
Let’s
discuss in detail!
How
Much Will You Repay?
In
debt management plan, you will have to pay your full debt at zero
interest. On the other side, consumer proposal makes it possible to
pay less than the full amount. However both the options allow you to
make payments for up to 5 years, only consumer proposal permits you
to repay less than the full amount.
Who
Prepares Plans On Your Behalf?
A
consumer proposal is prepared by a Legal Insolvency Trustee, whereas
management plan is prepared by a credit counselor. A consumer
proposal is approved by the court where management plan has no
government license. But in management plan credit counselors are the
members of a professional organization and are subject to annual
accreditation reviews.
To
be eligible to file a consumer proposal your total debts must be
between $1,000 and $250,000 per person. In case of debt management
plan, there are no limits.
What
Is Included?
In
both the processes, you are not going to lose your valuable assets.
Standard bank debts and credit cards are included in both processes.
But government debts, payday loan, and other debts are included only
in a consumer proposal.
If
you have debts with Canada Revenue Agency filing a consumer proposal
will be a right option. Payday loan companies will not agree to a
debt management plan.
In
a consumer proposal, if the majority of your creditors agree, all
creditors will accept your proposal. But the same does not go with
the management plan.
What
Can Your Creditors Do?
A
consumer proposal comes with a full legal protection.
Once
your proposal is accepted by your creditors, they can't take any
legal action against you. They will stop calling you and threaten you
for their payments.
A
debt management plan does not offer any legal protection. Creditors
may agree to the plan, but there is not any legal guarantee that they
will not take any action against you.
Make
a Choice According to the Situation!
Both
the options are good. A management plan is a good option if you have
a small amount of debt to pay. And consumer proposal is a better
option if you have a large amount of debt. A consumer proposal is
also a good alternative if you want to make payments in installments.
In
consumer proposal, you make the payments according to your comfort
and monthly income. Amount of your monthly installment will never
increase if your monthly income increases. You will have to pay a
fixed amount every month that has been decided with your creditors in
agreement earlier.
