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Debt Management Program vs Bankruptcy: How do they Stack Up?

Debt Management Program versus Bankruptcy – what’s the difference? Which is better? Compare the details, the lifestyle and the result with this infographic.

Debt Management Program versus Bankruptcy, a comparison infographic

The Details

Debt: With a debt management program, the debt is repaid in full over time; with bankruptcy the debt is partially repaid during the bankruptcy term, and then the rest is forgiven.

Interest: With DMP, the interest is reduced or even eliminated; with Bankruptcy the interest is eliminated.

Who they Work For: Credit Counsellors, who provide debt management services, work for you; Bankruptcy Trustees are Officers of the Court, and they work for your creditors.

Your Lifestyle

Length: A debt management program can be spread over a maximum of 5 year term depending on the debts and your ability to pay; a bankruptcy term is a minimum of 9 months and more often is 21 months or longer depending on your income.

Assets: With a debt managment program, you will not lose any of your assets; with bankruptcy you will lose all non-exempt assets.

Court Appearance: No court appearance is required with a DMP, while a court appearance is required in Bankruptcy if the discharge at the end of the term is opposed by any party including any of your creditors or your Bankruptcy Trustee.

Additional Income: If you earn additional income or attain additional funds after beginning a debt management program, you have the option to pay your debt out early or not, without penalty; with Bankruptcy the more money you have the more you are required to pay toward your debt and the longer you will stay in bankruptcy.

When It’s Over

Credit Rating: After completing a Debt Management Program, you will have a Credit Rating of R7 for up to 3 years; after Bankruptcy discharge you will have a Credit Rating of R9 for a minimum of 6 years.

R7 = Making regular payments through a special arrangement to pay your debts.

R9 = Bad debt; placed for collection; moved without giving new address; or bankruptcy.


If you are feeling overwhelmed with debt, speak with a licensed credit counsellor first to review your financial situation, and recommend the best solution for you – be it a debt management program, bankruptcy, or other options.


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