How to Manage Priority Debts in a DMP: Canada (2026)

Last updated: October 2026

A debt management plan (DMP) bundles your credit cards, lines of credit and personal loans into one monthly payment, usually with the interest reduced or frozen. It does not cover the debts that can cost you your home, your car or your standing with the Canada Revenue Agency. Those are your priority debts, and knowing how to manage priority debts in a debt management plan is what separates a plan that works from one that falls apart in month eight.

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.

Quick Answer Priority debts (mortgage or rent, car loan, CRA tax balances, child support, utilities) are paid first, in full, outside your DMP, and only the money left after them goes to the plan. If a priority debt changes mid-plan, you ask the agency to re-budget rather than skipping the DMP payment.

What counts as a priority debt in a Canadian DMP?

A priority debt is any obligation where a missed payment quickly costs you your home, your vehicle, your heat or power, or triggers government collection. In Canada that means your mortgage or rent, a secured car loan or lease, CRA income tax and benefit overpayments, child and spousal support, and essential utilities.

None of these go into a DMP. The Office of the Superintendent of Bankruptcy (OSB, 2026) describes a DMP as a voluntary agreement with some or all of your creditors that usually includes interest relief and repayment over time; in practice agencies include only unsecured debts such as credit cards, unsecured lines of credit, personal loans and collection accounts, because secured lenders and the CRA do not negotiate through credit counselling agencies. The plan has to be sized after the priorities, and our debt management plan strategies guide shows how that budget is built.

What are the advantages of paying priority debts first?

Paying priority debts first protects the things you cannot replace and keeps the DMP payment realistic, so you actually finish the plan.

Your home and car are safeMortgage, rent and car payments made on time mean no power of sale, eviction or repossession while you work through the plan.

CRA stays off your paychequeA CRA payment arrangement set up before the plan prevents wage garnishment or a frozen account, which the CRA can impose without a court order.

A payment you can sustainWith priorities budgeted first, the DMP payment is whatever is honestly left, so no month forces a choice between hydro and the plan.

What are the drawbacks?

The main drawback is money: after priority debts there may be too little left to repay a DMP within the usual 36 to 60 months. When that happens the DMP is the wrong tool.

Priority debts are not reducedYour mortgage, car loan and CRA balance are paid in full with their own interest, so total monthly outgo can stay high.

A priority shock breaks the planA mortgage renewal at a higher rate or a new CRA assessment can swallow the room you had; see what happens after a missed DMP payment.

No legal protectionA DMP is voluntary, so a creditor outside the plan can still sue or garnish; a consumer proposal is the option that stops that.

Who should use a DMP with priority debts?

A DMP suits you when your priority debts are current, or can be made current with a short catch-up, and the unsecured debt can be repaid within five years from the money that remains.

A DMP makes sense if:

Mortgage or rent, car loan and utilities are paid up, or at most a month or two behind with an affordable catch-up.
Any CRA balance fits a payment arrangement of 12 months or less.
Unsecured debt is roughly $8,000 to $40,000 and can be cleared within 60 months after priorities.

A DMP is probably the wrong tool if:

You are several months behind on the mortgage or facing power of sale or eviction.
The CRA balance is large, growing, or already being garnished.
Less than about $200 a month is left for unsecured creditors; compare a consumer proposal vs debt management plan instead.

What does a budget with priority debts and a DMP look like?

On $5,200 of net monthly household income with $2,450 of priority payments, about $2,750 is left, and a $22,000 unsecured balance can be repaid through a DMP at roughly $505 a month over 48 months. The structure is the same in every province and territory.

Net household income each month$5,200

Priority: mortgage payment, paid first and in full every month$1,650

Priority: secured car loan, paid in full to avoid repossession$420

Priority: $3,600 CRA income tax balance on a 12-month payment arrangement$300

Priority: $480 of hydro arrears caught up over 6 months on top of the regular bill$80

Total priority debt payments before the DMP is sized$2,450

DMP: $22,000 of credit cards and a line of credit at 0% interest over 48 months, plus a 10% agency fee$505

Left for groceries, insurance, childcare, transit and savings$2,245

Interest avoided on $22,000 at 21% repaid over the same 48 monthsabout $10,700

When the CRA arrangement ends in month 12, the household can ask the agency to raise the DMP payment and finish early; our debt management plan calculator guide shows how the term changes the payment.

How do you manage priority debts in a DMP, step by step?

You list every debt, separate priority from unsecured, bring priorities current, and only then let the agency set the DMP payment from what remains. The process takes two to four weeks from first appointment to first DMP payment.

List every debt and label it. Record each creditor, balance, rate and payment, then mark it priority or unsecured. The Financial Consumer Agency of Canada (FCAC, 2026) recommends this inventory as the first step in paying back your debt.
Deal with priority arrears directly. Ask the mortgage lender about a catch-up, the utility about equal billing, and the CRA about a payment arrangement; the CRA (2026) says on its debt collection page to call before the due date if you cannot pay in full or on time.
Build the budget with priorities on top. Income minus priority payments minus essential living costs equals the maximum DMP payment. Be honest about groceries and transport.
Choose a credit counselling agency. FCAC (2026) advises confirming the agency belongs to a provincial or national association and asking about fees before signing, on its credit counsellor page; our guide to what DMPs really cost covers typical fees.
Let the agency propose the payment to unsecured creditors. The agency sends each card issuer and lender the proposed payment and asks for interest to be stopped.
Automate and review every six months. Set priority payments to leave the day after payday and the DMP payment a few days later. When a priority debt ends or income shifts, book a review and adjust the plan rather than quietly missing a payment.

The bottom line

The Bottom Line Priority debts come first, in full, outside the plan; the DMP is sized from what is left. If that leftover can clear your unsecured debt within five years, a DMP is a sound, low-impact choice. If it cannot, a consumer proposal is usually the more realistic path.

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Frequently asked questions

Can I include my CRA tax debt in a debt management plan?

No. A CRA income tax balance cannot be included in a debt management plan, because the CRA does not negotiate interest relief through credit counselling agencies. You handle it with a CRA payment arrangement, for example $3,600 spread over 12 months at $300 a month, while the DMP covers the credit cards. A consumer proposal, by contrast, can legally include CRA tax debt.

What happens to my mortgage and car loan during a DMP?

Your mortgage and car loan continue exactly as before, paid in full and on time to the lender, outside the plan. A $1,650 mortgage payment and a $420 car payment stay in your budget for the whole 36 to 60 months of the DMP. See mortgages and debt management plans in Canada for renewal questions.

Can property tax or utility arrears go into a DMP?

Usually not. Property tax arrears can lead to a municipal tax sale and utility arrears to disconnection, so both are priority debts cleared through their own arrangements, such as $480 of hydro arrears paid at $80 a month over six months. Read can you put property tax arrears in a DMP for the details.

What if a priority debt goes up in the middle of my DMP?

Contact your agency before the next DMP payment is due and ask for a budget review. If a mortgage renewal adds $250 a month, the agency can ask creditors to accept a lower DMP payment or extend the term, say from 48 to 60 months; a missed payment can cause creditors to withdraw their interest concessions.

Who can help if my priority debts are too large for a DMP to work?

If less than about $200 a month is left for $20,000 or more of unsecured debt after your priorities, a DMP will not clear it in five years, so compare a consumer proposal. Only a Licensed Insolvency Trustee can file a consumer proposal or bankruptcy; the OSB (2026) page on debts getting out of control explains how to find one.

Marcus Chan( Principal & Institutional Finance Analyst )

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.