Last updated: November 2026
If you started a debt management plan (DMP) and the monthly payment no longer fits your budget, you may have read online about switching to an “IVA.” Here’s the first thing to know: an Individual Voluntary Arrangement (IVA) is a UK product and does not exist in Canada. The Canadian equivalent is a consumer proposal, and yes, you can switch from a debt management plan to a consumer proposal part-way through.
Canadian Debt Relief is an independent Canadian guide to debt relief options — consumer proposals, debt management plans, debt consolidation and bankruptcy — for people who want to understand their choices before they talk to anyone.
Is there an IVA in Canada?
No. Canada has no IVA; the closest equivalent is the consumer proposal under the federal Bankruptcy and Insolvency Act. Like an IVA, it is a legally binding deal to repay part of what you owe, available in every province and territory.
According to the Office of the Superintendent of Bankruptcy (OSB), a consumer proposal is open to individuals whose total debts are $250,000 or less (not counting the mortgage on your home), and its term cannot exceed five years. A debt management plan, by contrast, is what the OSB’s debt solutions comparison calls “a voluntary agreement with some or all of your creditors,” usually set up through a non-profit credit counselling agency.
The key difference: a DMP repays 100% of the principal; a proposal repays a percentage and legally releases the rest.
Can you switch from a DMP to a consumer proposal?
Yes, and there is no waiting period or penalty for leaving a DMP to file a proposal. Because a DMP is informal, you can end it whenever you choose; the consumer proposal then covers whatever unsecured balances are left, including the debts that were on your DMP.
If you’re only considering leaving, our guide on leaving a debt management plan early covers the other exits too, and our consumer proposal vs debt management plan comparison sets the two side by side.
What are the benefits of switching?
The main benefits are a lower monthly payment and legal protection from creditors.
What are the downsides of switching?
The biggest downsides are a heavier credit report mark and a possibly longer overall timeline.
Who should consider switching?
Switching is worth exploring if your DMP payment is now more than you can reliably pay, or if creditors outside the plan are still taking action against you.
- Have missed DMP payments or expect to (see what happens if you miss a DMP payment).
- Have a creditor that refused the DMP and is suing or garnishing your wages.
- Have income that dropped permanently, not just for a month or two.
- Have taken on debts a DMP usually can’t include, such as CRA tax debt.
Who should stay on their DMP?
If your DMP is affordable and you’re within a year or so of finishing, staying usually costs you less in credit damage than switching.
- Can keep making payments without borrowing or skipping essentials.
- Have a small remaining balance that you’ll clear within 12 months.
- Plan to apply for a mortgage soon and want the shortest credit report mark.
How much could switching save?
On $21,000 of remaining DMP debt, a consumer proposal might settle for around $6,300–$8,400, cutting the monthly payment from $500 to roughly $105–$140. This is an illustration; real offers depend on your income, assets and creditors.
See our consumer proposal example with real numbers, or run your current plan through the debt management plan calculator.
What happens to your credit when you switch?
A finished DMP comes off your credit report 2 years after you pay it off, while a consumer proposal comes off 3 years after you finish it or 6 years after you sign it, whichever comes first. Those timelines come from the Financial Consumer Agency of Canada (FCAC).
In the example above, a DMP finished at month 60 would clear your report around year 7. A proposal filed at month 18 and paid over 5 years would likely clear about 6 years after signing — around year 7.5. Paying the proposal off early can bring that date forward.
How do you switch, step by step?
Switching takes about 4–8 weeks from your first meeting to a decision from creditors. Follow this order so creditors don’t resume calling.
- Gather your latest DMP statement. Note each remaining balance and any debts outside the plan.
- Book a free consultation with a Licensed Insolvency Trustee (LIT). Only an LIT can file a consumer proposal in Canada, and they must review all your options, including staying on the DMP. Our consumer proposal eligibility guide explains who qualifies.
- Keep paying your DMP until the proposal is filed. Stopping early can restart collection calls.
- Sign and file the proposal. The LIT files it with the OSB, and the legal stay of proceedings starts right away.
- Tell your credit counselling agency to close the DMP. Ask for written confirmation.
- Wait for creditors to respond. Creditors have 45 days to accept, reject or ask for a meeting.
- Make your proposal payments and attend two counselling sessions. Both are required to complete the proposal and get your certificate.
Ready to see if you qualify?
Frequently asked questions
Can I switch from a debt management plan to an IVA in Canada?
No, because IVAs only exist in the UK. In Canada, someone on a debt management plan who wants a formal, legally binding deal to repay part of their debt switches to a consumer proposal instead, which can last up to 5 years.
Will my creditors find out if I leave my DMP for a consumer proposal?
Yes, every unsecured creditor on a consumer proposal is notified by the Licensed Insolvency Trustee and receives a copy of the offer.
Do the payments I made on my DMP count toward a consumer proposal?
Your DMP payments count because they lowered the balance the proposal is based on, but they don’t shorten the proposal’s term. For example, if $9,000 of a $30,000 DMP was already paid, the proposal is calculated on the remaining $21,000.
Who can help me switch from a DMP to a consumer proposal?
Only a Licensed Insolvency Trustee can set up and file a consumer proposal in Canada, according to the OSB. Your credit counsellor can close the DMP, and many LITs offer a free first consultation to compare both options.
How long does a consumer proposal stay on my credit report after a DMP?
A consumer proposal is removed 3 years after you finish paying it or 6 years after you sign it, whichever comes first, according to the FCAC. Any late payments from the DMP period can stay on your report for up to 6 years.
After 20 years of structuring multi-million dollar corporate debt facilities and corporate turnarounds in investment banking, Marcus now leads Canadian Debt Relief to apply those exact same balance-sheet optimization frameworks to Canadian household debt.
