Fastest Way To Rebuild Credit During and After A Consumer Proposal


Category: Bankruptcy Q&A (172) comments

Question: If I file a consumer proposal what is the quickest way to rebuild my credit? Should I save up for a secured credit card or just pay off the proposal as fast as possible first? Also, during a consumer proposal, is it possible to get a loan for a car? Thank you!

Borrowing and A Consumer Proposal

Those are good questions! There are effects of filing bankruptcy or a consumer proposal, and one of those is a note on your credit report. However both alternatives are an opportunity to begin the process towards repairing your credit.

Your ability to borrow is based on your credit score, but also your income, other debts, and past history. Disclosure of your consumer proposal will remain on your credit report for three years after your proposal is completed, so that will make it more difficult to borrow in the future. The quicker you pay off your proposal, the sooner the note will be purged from your credit report, so paying off your proposal as fast as possible is an excellent start to rebuilding your credit.

A secured credit card will help improve your credit, but only marginally. A typical secured credit card might be for $1,000, which will not have a significant impact on your credit score.

It is possible to get a car loan while in a proposal, but you will require a significant down payment, and you may be charged a high interest rate, unless you have a very good income, or you have a good co-signer.

If your goal is to rebuild your credit long term, the best strategy would be to:

  • pay all of your bills on time (like utilities, etc.) while you are in your proposal and after;
  • pay off your proposal as quickly as possible;
  • save money (because with a large down payment it is possible to finance a car at decent interest rates, even after filing a proposal).

As your credit improves you can begin to borrow larger amounts, but remember, it was debt that caused you to file a consumer proposal in the first place, so don’t be in a hurry to take on any more debt than is necessary.

Category: Bankruptcy Q&A |

About J. Douglas Hoyes

Douglas Hoyes, BA, CA, CPA, CBV, CIRP is a Licensed Insolvency Trustee and the co-founder of Hoyes, Michalos & Associates Inc., one of Canada's largest independent personal insolvency firms.

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  1. Robert

    I am currently in a consumer proposal and was hoping to trade my truck in for a new vehicle in hopes of saving some $ in payments.

    I see a lot of on-line lenders for bad credit. Is there any specific legitimate companies that lend to people in a consumer proposal?

    Reply
    1. Deanna

      I am almost finished paying off my consumer proposal (it was to be done in 6 years, I cut it down to 3 1/2). I am hoping to have it paid by November this year. I have a credit card that I use and pay off in full every month. I have a mortgage and pay all my bills on time and in full. I really need a new car by the end of the year. I have been reading some similar situations to mine. So perhaps a co-signer like a parent who has great credit will be the way to go? Or am I just wasting my time looking to finance a new car? Would a down payment make my chances a little greater at a good interest rate?

      Reply
      1. J. Douglas Hoyes Post author

        Hi Deanna. First, you should confirm that you have actually filed a consumer proposal. The maximum term of a consumer proposal is five years, and you are not permitted to keep a credit card when you file, so it’s possible that you have filed something else.

        However, to answer your question, yes, having a co-signer with good credit would greatly increase your chances of qualifying for a car loan, because the lender would be relying on the good credit of the co-signer, so your proposal would be less relevant to them. The greater the down payment, the greater the chances of being approved, and the better the interest rate.

        Reply
        1. John

          You actually can have a credit card while paying off your proposal. Affirm will give you an unsecured credit card starting with a $1,000 credit limit. The monthly fee is $9.00 and the interest rate is 39%

          Reply
          1. J. Douglas Hoyes Post author

            Hi John, you are correct about Affirm, although they have recently changed their policies so that now they are only giving unsecured cards to people who own a home, so they are not as flexible an option as they were in the past.

          2. Julie

            I am in my last months of a CP. Just a mention that I was able to obtain an Affirm M/C with a $1,000 limit in March 2016. I am not a home owner. I was also approved for a Capital One M/C with a limit of $300 but I am not complaining. The bigger one is kept strictly for groceries & gas when needed (because those amounts can be paid in full every pay day) and I’ve used the little one for purchases for the kids; boots, shoes, school trips, etc. Now that my financial situation has improved over the last few months, it’s a lot easier to keep things in check. In any case, I just wanted to mention that about the Affirm card.

  2. J. Douglas Hoyes Post author

    There are legitimate lenders, and there are lenders that are not-quite-so legitimate. Because you are still in your proposal it will be difficult to find a lender that will lend at attractive rates. I have two pieces of advice:

    First, for car loans, you may get the best financing deal through the manufacturer, if you buy or lease a new car. The manufacturer generally will have in house financing, and they are more likely to be willing to make less on the financing if they can make their money selling the car. That would be a good place to start, although there are no guarantees that they will have a good deal.

    Second, regardless of where you go for a loan, do the math. You know what you are paying per month now, and for how long. If you refinance, or trade in and buy a newer vehicle, how much will you be paying, and for how long? If you are paying $400 per month for the next year, it may not make sense to finance a newer vehicle where you pay $300 per month for the next five years. You have lowered your monthly payment, but if you are paying for many more years it may not be worth. Read everything before you sign on the dotted line.

    Reply
    1. Shanda

      I am currently finishing my first of three years in a Consumer Proposal. I am in desperate need of a car and want to buy a car from a dealership with financing. My Mom just finished her bankruptcy and makes about $2400/month sometimes more. If I need a co-signer, will she be eligible to co-sign?

      Reply
      1. J. Douglas Hoyes Post author

        Hi Shanda. Yes, your mother is eligible to co-sign; it will be up to the dealership to decide whether or not her credit is sufficient to give you the loan. They will look at a number of factors. Obviously it’s a disadvantage that you are still in your proposal, and your mother was bankrupt. However, they will also consider your income, your mother’s income, and how much of a down payment or security deposit you have on the car. I can’t predict what they will do, but in most cases car dealers want to sell cars, so they will probably find a way to make it work.

        My only caution for you: read the fine print and make sure you understand what you are paying, because you don’t want to be trapped in a very expensive car loan.

        Reply
  3. sanjay

    Question. My ex girl friend owes me a significant amount of money. She is broke and has started a new job but with rent and her wages getting garnished from previous creditors…. I dont plan on seeing that money for a long time. I told her to look into consoladting her debts. She wants to buy a used car that will help her get around and it will helpe as my parents are elderly and bus routes to see them are sparse. This sounds a little sneaky but seeing that she owes me money and is cooperating with me…. Is there a way I can add the debt she owes me onto her proposal? The debt is personal debt and she said she’d sign any documents required but I didnt knoe the process. Also…. If she buys a used car prior to the proposal…. Can that debt be added on to the proposal as well?

    Reply
  4. J. Douglas Hoyes Post author

    In a consumer proposal (or bankruptcy) all debts that exist at the time of filing a proposal are included in the proposal. So, if your ex girlfriend legitimately owes you money, that debt is included in the proposal.

    If she finances a car, and the loan is secured by the car, the loan is a secured debt and would not be part of the proposal, which only covers unsecured debts. If she borrowed money that was not secured by a car and then immediately filed a proposal the lender would consider that to be “sneaky” and would probably vote against the proposal, so that strategy is not recommended.

    Reply
  5. Glenn

    I am in a consumer proposal. I need a small loan of $4000 to get out of my overdraft and pay unexpected expenses. I make $80 000 a year. I have a cosinger who has excellent credit. Would any major banks be willing to give me a loan? If not, what other lenders could I go to?

    Reply
  6. J. Douglas Hoyes Post author

    As a general rule, it is very difficult to borrow during a consumer proposal. Lenders realize that if you default on your proposal all of your debt returns, so they are reluctant to lend you money until your proposal is paid off. You have a few options:

    First, you could borrow from family or friends to pay off your proposal, and then after a period of time you can rebuild your credit and be able to borrow again.

    Second, you could simply borrow from family or friends. If you have a co-signer, the co-signer could simply borrow the $4,000 in their name, and then lend the money to you. Obviously you are putting the co-signer at great risk, so that is a risky strategy. You must inform your friend that you are in a consumer proposal.

    Third, if you are having a temporary cash crunch, you could skip one or two payments in your proposal. However, if you fall three payments in arrears your proposal will be annulled, so this is also a risky strategy.

    There may be other options, so you should discuss this with your consumer proposal administrator.

    Reply
  7. J. Douglas Hoyes Post author

    If your payments are up to date, and if you choose to continue making the payments, the consumer proposal will not impact your mortgage or car loan, because they are secured loans. You can continue to pay your secured loans in full, so only your unsecured debts (like credit cards) are directly impacted by the consumer proposal.

    Reply
  8. Lori

    I make approximately $42,000 per year. I am 19 months into a 60 month consumer proposal. I pay $500/month and have not missed a payment, current balance approximately $20,000. I have managed to put $4,700 into RRSPs and have just finished a 12 month secured loan for a $1,000 GIC to rebuild credit. I have also saved about $4,000. I don’t know what to do with the money I have saved. Since proposal payment is interest free, it seems to me that there is no point making a lump sum payment until it pays the entire balance, just in case I have an unexpected expense. I want to buy a house asap. Should I continue to save and seek a private lender when I have enough of a down payment or should I use the savings and rsp and gic to pay off proposal so that the 3 yr clock can start ticking toward it falling off my credit bureau and put off buying a house until I can go through a traditional mortgage with a bank?

    Reply
  9. J. Douglas Hoyes Post author

    If you use your savings to pay off the proposal quicker you can rebuild your credit faster, but you are correct that you also lose your emergency fund.

    You should consult with your consumer proposal administrator to determine lending rules in your province. Currently in Ontario mortgage lenders will consider you for a mortgage TWO YEARS after you complete your proposal, provided you have a sufficient down payment and income. If buying a house is important, than paying off your proposal quickly is also important.

    If you do use your savings to pay off the proposal faster, and then encounter an unexpected expense, you have two options: You could cash in your RRSP (but then you pay the tax) or you could skip future proposal payments since you will be far ahead in your payments, and use those funds to deal with the unexpected expense.

    Again, I would suggest you consult your consumer proposal administrator who should be able to help you think through this decision.

    Reply
  10. Isaac

    I have a question about considering a consumer proposal in Ontario:
    I have a house mortgage and have 2 years left on the original 5 year term. I currently have a very good interest and would like to know what effects will the consumer proposal have when renewing my mortgage? Can lenders deny you? Will your rates significantly increase?

    Thank you for any response you can provide.

    Isaac

    Reply
  11. J. Douglas Hoyes Post author

    Whether or not you will be able to renew the mortgage, and what interest rate you will be charged, will depend on the lender, and your circumstances at the time of your renewal.

    In most cases if your mortgage payments are up to date your lender will send you an automatic renewal notice, you select the term you want, and you will be able to renew at market rates.

    It is possible that your mortgage lender would not want to renew your mortgage, but that is unlikely, because it makes no business sense. Mortgage lenders want to make money off you, and they do that by keeping your mortgage going, not by cancelling it. Also, for the lender, at renewal time now that you have been paying for an additional five years, there is five years more equity built up in the house, so it is even less risky for the lender than when they first granted the mortgage. If you have issues at renewal you should consult your consumer proposal administrator for advice.

    Reply
    1. Pierre

      I filed a 5 year consumer proposal 2 1/2 years ago with you guys. My Mortgage came up for renewal last month and because of my proposal my Mortgage company did not give me regular rates, as posted, but I have to pay 2% above posted rates as a result of my R7 credit score. Some Mortgage companies will check your credit score at renewal time and penalize you with a higher rate. My monthly mortgage payment just jumped up by $200 per month. I have never missed a mortgage payment, why do they have to cash in on my misfortune? Also this scenario was never mentioned to me when drawing up my proposal…would have been nice to have had a heads up about how this could/would effect my mortgage at renewal! Now because of our $600 /month proposal payment and our $200 /month increase in mortgage amount, we are feeling very financially tight right now,
      Also, if you plan to sell your house and move into a more affordable apartment building, anytime during your proposal and 3 years after, good luck at getting a decent reputable place to live, as almost all apartment buildings check your credit rating! At best, you may have to rent a basement apartment, privately. Again, this tidbit was not disclosed to me when filing my proposal..
      Please take my advise and think everything through before entering into a proposal.
      Just wanted to post my experience…

      Reply
      1. J. Douglas Hoyes Post author

        Hi Pierre. Thanks for your comments. You are correct. Most mortgage lenders (usually the big banks) will renew your mortgage without doing a credit check, because your history of payments with them is more important than what’s on your credit report. However, some lenders (generally smaller lenders, but not always) may do a credit check, or may make note of the proposal, and increase your interest rate on renewal. That is unusual, because, as you said, they have taken advantage of your misfortune, so once your proposal is over and you rebuild your credit, you will be refinancing with a different lender, and your old mortgage company will lose you as a client, forever. They were very short sighted, and for the sake of 2 percentage points for a few years they will lose a client for 20 years. It’s even more offensive given that over the last 2 1/2 years your house has probably increased in value, and the mortgage was paid down, so there is less risk now for the lender than when you started with the proposal. Lenders are sometimes very short sighted, placing short term profit ahead of long term customer satisfaction.

        Reply
  12. Leo L.

    I have finished my consumer proposal for two years. Is it possible to apply credit card from the bank that I have delinquent account before? I have credit cards from most of the major banks before so I don’t know if I should try it or not.

    Reply
  13. J. Douglas Hoyes Post author

    Yes, you are free to apply for credit from whomever you wish now that your proposal is finished. Whether or not the bank will give you a credit card is up to the bank. You say that you “have credit cards from most of the major banks”, so if you already have numerous credit cards it may be prudent to simply stop applying for more credit so you don’t encounter any future problems.

    Reply
  14. Heather

    I have a Line Of Credit, Mortgage and a credit card that I do not plan on including in my consumer proposal for personal reasons (co-signer on accounts). If I do a consumer proposal, will I still be able to keep this credit card? It is only for a small credit amount – $1000.

    Reply
    1. J. Douglas Hoyes Post author

      If you file a consumer proposal or bankruptcy in Canada you are required to list all of your unsecured debts; you can’t pick and choose; that’s what makes the process fair to all parties. Your mortgage is a secured debt (secured by your house), so you may continue to pay your mortgage, but your unsecured line of credit and credit card must be included in your proposal. If you were to exclude some of your unsecured creditors and the remaining creditors discovered that fact, they would probably vote against your proposal, since they would assume you were not fully honest with them.

      As for your co-signer, it is still possible to file a proposal and not harm your co-signers. This is something you should discuss with your trustee prior to filing so that you have a strategy in place to deal with the co-signer issue.

      Reply
  15. George

    Hi there im almost 2 years in a 5 year consumor proposal come this july..In july i will have enough equity in my house to pay it off at $15000.. I can get a second morgage at a decent rate..your opinion on this would great..thanks!!

    Reply
  16. J. Douglas Hoyes Post author

    The advantage of getting a second mortgage to pay off your proposal is that you are done; no more proposal payments, so nothing can go wrong with your proposal. If you can get a decent rate it is worth considering.

    The counter-argument would be that your proposal has a zero per cent interest rate, so if you borrow money to pay it off you are paying some interest. I suggest you weigh both options (get a mortgage, or continue paying on the proposal), and if the mortgage payments are reasonable then paying off the proposal and continuing to rebuild your credit is probably a good option.

    Reply
  17. Elisabeta V.

    Hi, I’m half way into a consumer proposal of 5 years, paying $420 monthly and am a single parent. Should I rather invest my savings of $1000 into paying the consumer proposal slightly sooner or invest it in a secured credit card (that might improve my credit score and come in handy for urgent situations?). I have recently been involved in a no fault car accident and, although the insurance company referred m e to a car rental company, the latter would not give me a rental without a credit card in my name! I had to take the buses for 14 days. Thank you.

    Reply
  18. J. Douglas Hoyes Post author

    If you believe having a secured credit card is very important to you, then yes, getting a secured card now is a good idea. At this point it won’t do much to improve your credit (because you are still in the proposal), but having the credit card may help in car rental situations as you described.

    If having the credit card isn’t important, I would set a goal to get two or three months ahead on the proposal, and then start saving towards the secured credit card, so you get the best of both worlds. Your number one priority should be to complete the proposal, because is the best way to begin rebuilding your credit.

    Reply
  19. TH

    Hello, and thank you for this article. I completed my consumer proposal 2 years ago and in the next 1 to 2 years my spouse and I are looking to purchase a home. My goal is to rebuild my credit enough in the next 1 to 2 years so that when the proposal falls off my credit report in 2015 I will have a sufficiently rebuilt rating & score to co-qualify for a mortgage at a good rate. (More info: I have no current debt and have applied for no credit since the proposal was completed.)

    My question is this: in your article you say that having a secured credit card will “only marginally” help my credit score, but if I carry a secured card for 6-12 months and use it to “graduate” to an unsecured card which I would continue to carry leading up to the home purchase, in your opinion would that be enough to sufficiently rebuild my credit so that in the next year or two I could qualify for a mortgage (with 20% down) at a reasonable rate?

    Thank you in advance for any response or advice you can give!

    Reply
  20. J. Douglas Hoyes Post author

    Yes, that is probably enough, but it is impossible to say for sure, because your ability to borrow depends on many factors, including for example your income.

    A secured credit card is a good start, and if it allows you to, in time, as you say “graduate” to a larger credit card, that will help. Most mortgage lenders will give you good rates if two years have elapsed since you completed your proposal, so with two years and a 20% down payment you should be in a good position to finance a house, dependent on your income and other factors.

    Reply
  21. Ann H

    Hello,

    I have finished my 2 year term consumer proposal in March 2013. (That is when I received the letter from my consumer proposal administrator.)

    I have tried applying for a regular credit card through MBNA and got denied in May 2013 (2, 3 months after the discharge) as well as a secured credit card through CIBC in Sept. 2013 and got denied despite the $500 secured fund.

    It’s been officially a year since my consumer proposal completion and I am just wondering if it would be wise to to re-attempt applying for a secured credit card in order to rebuild my credit history. I always pay all bills, (utility, cell phone, etc.) on time and have about $3000 in savings.

    Any feedback would be greatly appreciated!

    Warm regards,

    Ann H

    Reply
  22. Imran

    Hi,

    My wife & I owe $27,000 from line of credit & visa cards. we have bought house in Aug 2012. Now due to my wife illness she is unable to work & I am only income in house. We are missing credit card & line of credits payments since last two months. what are our options. do we file consumer proposal or go for 2nd mortgage with 14% interest & heavy lending fees. we have almost $50,000 equity in our house. we are in 18 month for our 5 year fixed mortgage .

    Thanks

    FH

    Reply
  23. J. Douglas Hoyes Post author

    The first step would be to confirm the exact amount of equity in your house. In other words, if you were to sell your house today and pay the real estate commissions, legal fees, and penalty to break the mortgage, how much cash would you receive on closing? For help with that calculation you should consult a trustee for a no charge initial consultation; here’s the link: http://bankruptcy-canada.com/contact-a-trustee/

    If you have $50,000 in equity and only $27,000 in unsecured debts you cannot file a consumer proposal, because you are not insolvent. That’s why it is critical to accurately calculate the house equity so that you can determine whether or not a consumer proposal is an option.

    Reply
  24. EJB

    We have paid off our consumer proposal a year early as of May 2013. I just got a copy of my credit report. It states that all my accounts are revolving still. I understand that they will show for 3 years on my credit report but should they be closed? Most are not showing that they are part of the proposal and I have contacted Equifax and will be faxing in all the correct documentation to correct my credit report. Should they also be fixing it to say paid in full, closed or something of that matter? It seems like quite the mess as very few things are actually correct on my credit report. Glad I got a copy of it so I can correct the issue!

    Reply
  25. J. Douglas Hoyes Post author

    Your experience is very common. Most credit reports contain errors, so your approach is correct: contact Equifax and advise them of the errors. You should also confirm with your consumer proposal administrator that the accounts did file claims in your proposal (which confirms that they were notified). The note on your proposal should indicate “included in proposal” or something similar.

    Reply
  26. D.B.

    I had a consumer proposal on March 29-2007 and it was paid in full on February 15-2011. I sent a copy of my paid in full consumer proposal documents in February 2011. It is now 7 years since this first happened. Will my credit bureau show now as clear?? Will I be able to apply for credit & have no problem.

    Reply
    1. J. Douglas Hoyes Post author

      D.B.: Yes, your credit report should now show as “all clear”. The credit bureaus in Canada generally leave the consumer proposal on your credit report (in the legal items section) for 3 years after you complete your proposal, so since the proposal was completed more than three years ago, it should no longer appear on your credit report.

      Please note that individual creditor accounts (like Visa, Mastercard, etc.) may remain on your credit report for up to six years after the date of the last activity, so it is possible that they may appear on your credit report. To find out, get a copy of your credit report and confirm what information continues to appear, and if there are errors you can contact the credit reporting agency directly.

      Reply
  27. James L.

    First of all I just wanted to say you guys have given more information on here then my current proposal administrator. Thank you. Now first question. In Alberta how many years after a proposal does one have to wait to apply for a mortgage? Second question. If a persons has concerns about the current level of service, information provided and benefit their current proposal trusties is providing what recourse does a person have to help with this? Our concern being that when ever we ask questions about our credit and whats going on with it, they actually seem to get mad and tell us not to bother even looking at it until we are done… And to go further an issue that they caused with the bank regarding our vehicle loan (that we kept during the proposal) went to a credit bureau and they keep telling us there is nothing they can do about it (we kept the truck and made all the payments but they miss communicated with the bank about the loan being a part of the proposal and the bank stopped with drawing the payments and then told us we were in default. We cleared it up but still shows on a credit report.) and that its our fault for not changing bank’s? Sorry for the long message but we would like some insight.
    Thanks you for your time.

    Reply
    1. J. Douglas Hoyes Post author

      James: Thanks for your comments.

      You can apply for a mortgage whenever you want. However, in general, you will get the best rates from lenders if your proposal has been completed for two years (and that you have a sufficient down payment, and adequate income). My standard advice is that once your proposal is completed, start saving money and taking steps to rebuild your credit, so that when you get to the two year mark there you will be in the best position to apply for a mortgage. If you can wait longer and save up even more of a down payment, that will increase your chances of qualifying for a mortgage at good rates.

      As for comments about your consumer proposal administrator, if you believe they have misled you, you can discuss it with a representative of the Office of the Superintendent of Bankruptcy: http://www.ic.gc.ca/eic/site/icgc.nsf/eng/h_07026.html#from=Bankruptcy&pageid=E750-Hbr00000 Without knowing all of the details it’s difficult for me to comment further on what actions should have been taken to prevent this from occurring.

      Reply
      1. Dave W.

        We are just about to enter into a consumer proposal. We have a small rental property that is security for a private mortgage on the property. I know that secured debts do not fall under the proposal, however, there will be a shortfall generated when the property sells. It is listed with an Ontario real estate broker. We had previously offered the property to the mortgage holder (surrender title) but he was not interested. We have stopped payments to the mortgage holder which should force the issue. My question lies with what to do with the rental income from the property. Should that go to the trustee? To the mortgage holder? We have been advised not to make payments to the mortgage holder by the trustee.

        Reply
        1. J. Douglas Hoyes Post author

          If there will be a shortfall on the property and it is your intention to surrender the property, than the trustee is correct in their advice: stop making payments on the mortgage. At some point the mortgage holder will seize the property, and the resulting shortfall will be included in your proposal. Once the property is seized and sold, the shortfall is an unsecured debt, and because the debt existed prior to you filing the proposal, and you made no payments on the mortgage after filing the proposal, the debt is included in the proposal.

          As for the rental income, in a proposal you keep all of your assets. It will quickly become a moot point, since if you are not paying the mortgage and if you have filed a consumer proposal the mortgage holder will presumably take quick action, and will probably take steps to seize the rent once they are in possession of the property.

          Reply
  28. Lori C.

    We are 18 months into our consumer proposal, but our 2006 vehicle started needing too may costly repairs, so we were just approved (on my income alone) for a $21,000 car loan at 22.5% on a 2013 vehicle. My question is this – The Car Dealer told us that since this loan is being reported to both Bureaus, that we will be rebuilding our Credit – Is this actually true since we are still a long way from completing the proposal which ends in Oct 2017?. Also is this a decent interest rate considering that we have a consumer proposal? (we were previously paying our old vehicle loan at 7.7%). Once we pay the vehicle loan for a couple of years, will other banks consider buying this loan out at a lower interest rate if we can show a good record of payment, or will we have to wait until the proposal is paid in full to get a decent interest rate? Also, we were both recently approved for Canadian Tire MasterCards in the amount of $2,000 each at 19.9%, (these are the only credit cards we now have) – will these also help build our credit?. Any other advice would be appreciated. Thank you so much

    Reply
    1. J. Douglas Hoyes Post author

      Lori: Yes, the car loan will most likely be reported to the credit bureau, which will help improve your credit score, provided you continue to pay it after you complete your proposal.

      As for the interest rate, you answered your own question. You were paying 7.7% when your credit was better; now they want 22.5%, which is a very high interest rate, presumably because you are in a proposal. The loan only makes sense if you absolutely require a vehicle, and have no other options.

      Yes, other credit cards will help build your credit, but they will have very little impact until your proposal is paid, so your number one goal should be to get the proposal paid off, and then to start the credit rebuilding process.

      Reply
  29. Max

    I went for a consultation to look into filing a consumer proposal. They asked if anyone owed me money. I told them my ex currently owes 10 000 in child support and a judgement for 5 000 in court costs. He is ordered to pay 800/month in support and “catch-up” payments of 200/month but never pays. He avoids filing income taxes and his employer hides the fact that he works there, pays him through a family member or pays him cash under the table. It turns out my ex filed for bankruptcy, then it was “upgraded” (??) and changed to a consumer proposal 7 months ago with the same company I went to for the consult. I was not listed as a creditor but Maintenance Enforcement was listed with the balance he believed was what he owed on the day he filed. I was then told that I should file a claim on his proposal, reject the 26% offer, force a bankrupcy, eventually get some of the money he owes and then file for my own consumer proposal because by then I’ll be in even rougher financial shape. Was this good advice? I’m a single mom with 3 teens under 18 (4th is 19 and living on own), earning 38 000 with 40 000 in debt. No house or mortgage and a lemon for a vehicle. What advice do you have?

    Reply
    1. J. Douglas Hoyes Post author

      Max: Without knowing all of the facts about your situation, I can’t comment on whether you got good advice or not. If you have $40,000 in debt that you have no hope of repaying, a consumer proposal may be a good option.

      As for voting against the consumer proposal offered by your ex, again, I can’t comment on that without seeing the paperwork. The voting period in a consumer proposal is 45 days, so the first question is when was the proposal filed? If more than 45 days has elapsed you may not have the opportunity to vote. I have two suggestions:

      First, this would be a good topic to discuss with your family law lawyer.

      Second, if you are unsure if you got good advice from the trustee, who is also your ex’s trustee, you could always go and meet with another trustee and ask them to explain your options as well.

      Reply
  30. Jiro

    Hi J. Douglas, I paid off my consumer proposal last July 2013. I also got approved for a mortgage and now I would like to try and apply for a line of credit or personal loan. What do you think my chances are of getting those loans? Thank you.

    Reply
  31. J. Douglas Hoyes Post author

    Hi Jiro. My first question would be: why do you want to apply for a line of credit or personal loan? Now that your debts are eliminated, do you really want to get back into debt? I understand getting a mortgage, but you should be careful about getting more debt than is necessary.

    To answer your question, your consumer proposal will drop off your credit report in three years, so since it is about a year since you paid it off you may still pay higher than normal interest rates on any new borrowing. Whether or not you qualify will depend on your income and any other assets you may have.

    Reply
  32. Ric

    Hi,

    Two years ago I completed my Consumer Proposal and as of April 2014 finished the mandatory two years of having no credit cards, loans etc..
    Currently, my wife and I are looking to purchase a new house. Our house’s current equity is sufficient for the 20% Down Payment for a new house of a higher value, and we plan to sell it within the next 4 months.
    Our combined income (in normal cases) qualify for standard mortgage. However, having a CP history would that hurt my chances in obtaining a new (higher value)Mortgage.
    I have checked my credit report, and due to the recent CP discharge etc.. I am not rated.
    What steps should I take?

    Any suggestions is greatly appreciate.

    Ric

    Reply
    1. J. Douglas Hoyes Post author

      Hi Ric. The starting point would be to talk to a mortgage broker or your bank and find out what you qualify for. With your income and down payment the completed proposal may not be an issue. At the current time lenders prefer that you be two years past the completion of your proposal to give you the best rates, but the sufficient income and down payment are also important.

      The only other strategies to improve your credit score would be to borrow some money, perhaps by applying for a credit card or line of credit. Those small amounts may increase your credit score. However, time is also an element in the credit score math, so there may be little you can do immediately. I would start by talking to a lender and see what they suggest in your case.

      Reply
  33. Jennifer

    Hi, thank you for all the great info on here! I am concerned about filing for a consumer proposal for a few reasons I haven’t found concrete answers to… I am worried my mortgage company will hike the interest rate or refuse to renew me when im up for renewl because I am higher risk, also I worry if the proposal is denied, the consequences from the lenders knowing were in trouble and hiking rates and min payments (bankruptcy is not an option with my circumstances)… I keep getting told these two things SHOULDN’T be an issue, but the not knowing and potential devastating consequences are keeping me from filing… In your experience have you ever had any of your clients mortgages or rates affected even though their mortgage was in good standing or had reasonable proposals denied with major banking institutions?

    Reply
  34. J. Douglas Hoyes Post author

    Hi Jennifer. You are correct; a lender can decide to increase your interest rate on renewal for whatever reason they want, proposal or not.

    In my experience I cannot remember a case where a lender increased a mortgage rate on renewal due to a consumer proposal. I suspect there are two reasons for that: first, by the time you renew, your mortgage is lower than when you first borrowed, and the house is worth more, so there is more equity so you are actually a lower risk. Second, banks don’t want to lose customers; that’s how they make money. They don’t want to risk losing you by raising your interest rate.

    Here’s the final consideration: if you don’t do a consumer proposal, can you continue servicing all of your debt, including your mortgage? If so, keep paying. If not, you have no choice but to file a consumer proposal, because if you don’t you risk not having the cash flow to make your mortgage payment, so you risk losing the house in any event, so an increased interest rate is the least of your worries.

    Your situation as many nuances, so I suggest a consultation with a professional to ensure you have considered all options.

    Reply
  35. Jim

    Hello ! I am only in my second month of a consumer proposal I was able to keep my car loan which has never been late same as for my mortgage paid bi-weekly. I managed to keep my Home Depot credit card which as a limit of 1500$ and A balance to pay of 250$ .
    I started a new job and my boss got me a BMO credit card in my name ( fed Governement of canada) for work travels. Will having these 2 cards in my name help me rebuild credit faster than it should have or maybe even not destroy what excellant credit I had for many years?

    Reply
  36. J. Douglas Hoyes Post author

    Hi Jim. Actually, not disclosing debts in your proposal and keeping a credit card will most likely cause you serious problems. In your proposal you went to your creditors and advised them that you could not pay your debts in full, but you kept one card which you are paying in full, which is not fair to the other creditors. If they find out, they may take steps to cancel your proposal. You should immediately discuss this with your consumer proposal administrator.

    You are permitted to have a card provided by your employer, since they are responsible for it, but that does not impact on your credit report, since it’s not your card.

    You can apply for a secured credit card while in a consumer proposal, which will begin to improve your credit, provided you do it after the proposal starts. More details can be found here: http://www.moneyproblems.ca/debt-solutions-blog/secured-visa-card-repair-your-credit/

    Reply
  37. NINA T.

    I paid off a 3 yr consumer proposal, all on time, Feb 2013. I want to reestablish credit. What is the best secured card to get; how long do I need to make payments? When will my credit report reflect improvement?

    Reply
    1. Ted Michalos

      The fact that you filed and completed a proposal may be reported on your credit report for up to three years after your last payment – if you finished in Feb 2013 then you’ve got another 21 months to go… It is hard to say which secured card is best. Usually I suggest you sit down with the bank (or financial institution) you are currently dealing with and ask them to issue a secured card. Most banks don’t advertise this service, but if you ask, they will tell you if you place $500 or more on deposit they will issue you a credit card with a $500 limit. By dealing with your current bank you should be able to begin to develop a relationship that may get you approved for larger credit faster than simply applying for a secured card on-line. Good luck.

      Reply
  38. rob

    Hi,

    Due to family illness our finances have changed. I’m now the sole provider for our household and can’t manage all by myself. I’m considering to file a consumer proposal for my outstanding bills. My question is, how will that affect our mortgage? We also have two secured vehicle loans.. (car and motorcycle that if possible would like to keep).. how does that work? thank you in advance for your time!

    Reply
  39. J. Douglas Hoyes Post author

    Hi Rob. The short answer is that secured debts (mortgages, vehicles loans) are not dealt with in a consumer proposal, so you can continue to pay your mortgage and vehicle loans and keep your house and vehicles if you so choose. A consumer proposal administrator can explain the specifics in more detail at your no charge initial consultation.

    Reply
  40. Richard

    Hello,
    I have completed my consumer proposal in Dec. 2013. During my proposal I also continued to pay my car loan. This loan has been payed in full now. I currently have no debts or credit cards. My question is my brother and I own a house but the mortgage is in his name and our parents name. My brother and I are the only two that occupy the house and make the mortgage payments. The mortgage will be up for renewal in Oct. 2015. Would there be any issues when it comes time to renew the mortgage and having it in my name and my brothers. Thus removing our parents from the mortgage. The mortgage renewal will have to be with a new lender as out current mortgage lender advised us about 2 years ago that they are getting out of the mortgage business. Is there anything I should be doing prior to the mortgage renewal date. Thank you in advance for your help.

    Reply
  41. Chantel

    I satisfied and was discharged from my consumer proposal in February 2011, when I checked my credit report (both Trans-union & Equifax) back in March 2014, the record of the proposal is no longer there. I want to get a small secured loan from my bank for less than $4,000 but when they asked if I had a bankruptcy in the last 7 years I said no but I had a consumer proposal that I was discharged from 3 years ago and is no longer on my record. They stopped me right there and said they won’t even bother with the application as I have a bankruptcy. I argued that ta proposal isn’t a bankruptcy and that it isn’t even on my credit report anymore. I feel like I shot myself in the foot my telling them about the proposal, but they told me that if I didn’t tell them I would be falsifying my application. Is a proposal considered a bankruptcy? I am justified in answering “No” when they ask me if I had a bankruptcy in the last 7 years or am I lying. I need this small loan, I don’t have anyone I can borrow it from, my credit is above 620 with a fair rating, will I qualify?

    Reply
    1. J. Douglas Hoyes Post author

      Hi Chantel: Unfortunately the banker you were dealing with is incompetent and probably shouldn’t be working in a bank, but that’s the way it goes. A bankruptcy is not a consumer proposal, but they are governed by the same legislation. In this case, with a banker who doesn’t know what they are doing, yes, you “shot yourself in the foot” by giving them information they didn’t ask for.

      I would suggest that you either start rebuilding your credit with something small, like a secured Visa card (http://www.moneyproblems.ca/home-trust-secured-visa-card-application-no-fee/ ), or you go to another lender and apply again, and if they ask you if you have ever filed bankruptcy, tell the truth and say “no”, and leave it at that.

      Reply
  42. J. Douglas Hoyes Post author

    Richard: good question. As a general rule mortgage lenders like to see that you are “two years clear” of your proposal when you apply for a mortgage, so by 2015 you will be very close to that date, which will help.

    Having a paid off car loan also helps. To improve your chances you could talk to a mortgage broker or banker now and ask them what they suggest you do to improve your credit score, since they are the ones who will be approving your loan. They will probably suggest that you establish new credit, perhaps with a secured Visa (here’s a link: http://www.moneyproblems.ca/home-trust-secured-visa-card-application-no-fee/ ) or by getting a regular credit card or small line of credit. Your bank may be willing to do that now. The key of course with the new borrowing is to keep everything paid off each month and not to get into more debt, which would be counter-productive.

    Reply
  43. craig t

    Hi, I’m about to pay off a consumer proposal two and a half years early. I’ll have money in the bank and no other debt or bills on any kind, just monthly rent. I’m going to get a secured credit card and use it as much as possible to build up my credit rating. Question is, how long does it usually take for the credit rating to rise to the point that potential lenders or landlords are impressed by it?

    Thanks!

    Reply
  44. J. Douglas Hoyes Post author

    Hi Craig. There is no set answer as to how quickly your credit score will improve, because it depends on many factors. However, in your case, my answer would be “fairly quickly”.

    Landlords are a diverse group, so they don’t follow any particular pattern. In most cases the fact that your proposal is finished, and you have a job and first and last month’s rent is all that most of them will require.

    For potential lenders, each one is different. Currently mortgage lenders like to see you “two years clear” of the completion of your proposal, but of course that will also depend on your income, the amount of your down payment, and other factors.

    A secured credit card will assist with your credit score, but only marginally, because the amount of credit is low. Your credit score will improve once you get a second form of credit, such as a bank loan or another credit card.

    NOTE: I’m not recommending that you get more credit. I believe increasing your savings is the most important step to take, so that you have a sizeable down payment or security deposit when you want to borrow for a car or house. Best wishes for your fresh start!

    Reply
  45. Peter r

    Hi there

    I’m 8 month into my comsumer proposal. A couple of times I had to go to those pay day loan companies. I have done this twice and I have always paid it off I time. I was just wondering if this helps build my credit and also should I apply for overdraft at my bank be aide that would be better than payday loans

    Reply
  46. Angela

    I’ve read some comments on here that some people were able to get a car loan /unsecured credit card while in a proposal. Curious how that’s possible while in a proposal? I’m almost done paying off my proposal and was under the impression one needs to wait until discharged from their proposal to obtained credit

    Reply
    1. J. Douglas Hoyes Post author

      Angela: Yes, it is possible to get a secured car loan or credit card while in a proposal.

      Car loan lenders will generally require a large security deposit, and will probably also charge you a higher interest rate, so if you can wait until your proposal is completed and you have a saved a security deposit your cost of borrowing will be much lower.

      As for a credit card, you can get a secured credit card while in a proposal. Here is a link with more information: http://www.moneyproblems.ca/debt-solutions-blog/secured-visa-card-repair-your-credit/

      Reply
  47. Marcie

    Hello there . So my mom was in a proposal , she paid off her debts and everything was done with the proposal over a year ago. She has a car loan , and a credit card building her credit for the last 3 years. I am currently a stay at home mom with 2 kids and require a bigger vehicle. My boyfriend has good credit , but owns his own business .. So because were just starting out with that (2 years ) now , and we make good money.. But have no income to show . But have good credit We are trying to finance a new vehicle . We needs co signer , my mom is willing to co sign. Just wondering with her history if she could ? We also have a downpayment for the vehicle , Of 2,500$. The vehicle is 8,400$ . Wondering if this will work out for us ?
    Thanks so much marcie

    Reply
    1. J. Douglas Hoyes Post author

      Marcie: if you have a $2,500 down payment on an $8,400 vehicle it is doubtful that you would require a co-signer. You may want to shop around for a better deal.

      Your mother can act as a co-signer; whether or not you want to put her credit at risk is a different matter.

      Reply
  48. J. Douglas Hoyes Post author

    Peter: under no circumstances should you be going to payday lenders. I suggest you book a meeting with your consumer proposal administrator and ask them to determine if your proposal is still viable. If you can’t make the payments your proposal will eventually fail, so perhaps a bankruptcy would be a better option for you. A consumer proposal is designed to improve your financial situation, not to make it worse.

    As for your question, in most cases payday lenders do not report to the credit bureau (since the loan is only open for a short period of time), so it is not helping build your credit.

    If you want to improve your credit, pay off your consumer proposal, and then start saving money. Attempting to borrow while in a consumer proposal designed to eliminate your debts is a counter productive strategy.

    Reply
  49. T.M.

    We are currently almost 2 years into our proposal. I have a credit card with a $2000 limit. When we filed the proposal my husband wasn’t working steady and making less money. We now are better off financially and will have a car loan paid off in less than 3 months. We would like to purchase a new ATV and cannot get approved through a dealer. They did tell us about a website that we could apply and most likely get approved at a higher interest rate. We can cover all the bills we have and have extra cash to boot. I cannot find the paperwork for our proposal, I am wondering if we are allowed to apply for the financing? Would there be any stipulations that we are not allowed???

    Reply
    1. Ted Michalos

      You are allowed – a proposal in no way prohibits you from applying for new credit during the proposal. Having said that, are you sure it makes sense to incur a new high interest loan for an ATV? Unless the ATV is the deal of the lifetime, I would hold off. Wait a few weeks just to see if you really want/need it now. Just my 2 cents worth…

      Reply
  50. Olivia

    Hi there,

    I live in B.C. and I’m 2.5 years into a 4 year consumer proposal. I recently requested a copy of my credit reports from both Trans Union and Equifax to ensure everything was being reported accurately and was surprised by what I saw. When I received the Equifax report it showed that I was currently delinquent on an account that was accepted and included in the propsal, a line of credit with Scotia bank. The report states that every month since the proposal was filed I have been delinquent on the account. I’m not sure why this is happening and my trustee can’t seem to answer this for me. This account was a joint account with an ex and I was told by my trustee that when I filed the proposal I would be legally separating myself from my ex and taking responsibility for my share of the debt.

    I have been working so hard to resolve my debt and work towards rebuilding my credit and I cannot imagine that 2.5 years of “delinquent” reported payments is going to help me with this.

    Thank you in advance.

    Olivia

    Reply
    1. J. Douglas Hoyes Post author

      Hi Olivia. It is very common to have errors on your credit report. They often get corrected when your proposal is completed. I would suggest you contact your trustee and confirm that Scotiabank has filed a claim in your proposal. It’s possible that they simply haven’t processed it, which is why your credit report was not updated. I know that sounds surprising that a big bank doesn’t process paper quickly, but it happens all the time. Your trustee can advise you on further steps to take to correct the error.

      Reply
  51. Wayne

    I paid my proposal in full and received the final documents from the Trustee. I sent the documents to equifax with a letter, they are telling me that is not sufficient for them, they need a certificate from the court. I don’t know what to do, I figure this was all over. I search online but I don’t see any information about getting a certificate.

    Reply
  52. J. Douglas Hoyes Post author

    Hi Wayne. In a consumer proposal there is no certificate from the court when your proposal is completed. There is a certificate of completion, issued by your consumer proposal administrator (your trustee). In addition, your trustee sends notice that your proposal is completed to the Office of the Superintendent of Bankruptcy (OSB) who in turn notifies Equifax, so there is nothing you need to do. I would suggest you confirm with your trustee that they have sent the appropriate documentation to the OSB.

    Reply
  53. Tim T.

    I am 3 months into my 2 year consumer proposal. When or can I begin applying for a credit card even if it means secured funds?

    Reply
  54. Megan W

    My husband and I just paid off our proposal 2 months ago, about 4 months before it was scheduled to complete. We received all of our discharge paperwork and have no interest in applying for credit at this time.

    I was very concerned when I checked the mail tonight and opened a bill from a credit card company who was paid in the proposal. They’ve sent me a bill asking for the full amount, minus what was paid through the proposal. Am I obligated to pay this? I understood that this was not allowed.

    Reply
    1. J. Douglas Hoyes Post author

      Hi Megan. No, you are not obligated to pay a debt that was included and discharged in your proposal. You should immediately contact your consumer proposal administrator and request that they send a letter to that creditor objecting to that letter.

      Reply
  55. Malou

    Hello there. I was hoping to get a piece of advice before going into consumer proposal. I have credit card debts that I can’t pay as I am the sole income earner as my husband has difficulty finding work. For the past four months, my bills have been in a mess and accumulating interest plus late payment and overlimit fees. I would pay them off if I had the money – I just need more time but now they’re all calling and have forwarded to their collections departments. Should I give it more time until I can start paying them off one by one – leaving one to overlimit then negotiate (it’s becoming a very nasty cycle and it’s stressing me out)? Most of my credit cards have now gone overlimit to a total of $27,000. Is my credit totally bruised and no more point in trying to pay off one at a time? Should I go ahead and apply for consumer proposal while a little early? Please advice. Would appreciate any input. Thank you so much.

    Reply
    1. J. Douglas Hoyes Post author

      Hi Malou. These are good questions. I think the first question to ask yourself is this: how long will it take you to pay off your credit card debt on your own? You are currently under a lot of stress, and you are getting collection calls, so if it will take many years to pay off your debt, do you want to put up with the stress and collection calls for many more years? If not, doing the consumer proposal now makes sense. If you are already in collection your credit score is already severely damaged, so a consumer proposal now would eliminate your debt, and ultimately give you a much better credit score in the future.

      Reply
  56. Amanda

    Hello, I have a question about employer credit checks after filing for a consumer proposal. I am currently a student in a cpa program and I am concerned about being able to secure employment in a large firm if I file a consumer proposal. If I wait the three years after completion of the proposal and then actively look for work, will the employers be able to still see that I have had credit problems? Thank you for your time.

    Reply
    1. J. Douglas Hoyes Post author

      Hi Amanda. The note indicating you filed a consumer proposal will remain on your credit report for three years after you complete your proposal, so after three years it should not appear as a note in the legal items section of your credit report. The bigger question will be whether or not there will be any licensing issues with the CPA institute, so I would suggest you contact them to determine if you will have any issues going forward. (You can even contact them on a “no names” basis).

      Reply
  57. Mike T.

    Hi there,
    I filed for consumer proposal on March 2010, and graduated on March 2011.
    Now, four years later I wanted to try and get a mortgage before buying a home, and realized from the credit bureau that I still owe money to PC Mastercard ($4000) and $10,000 to Abrams towing (I guess I forgot to include them in the proposal).
    What would you recommend I do before applying for a mortgage again so I’ll have a clean record? Should I settle with these companies or will this debt disappear somehow?
    Thank you very much for your time.

    Reply
    1. J. Douglas Hoyes Post author

      Hi Mike. I would suggest you contact your consumer proposal administrator and ask them to include these debts in your proposal, because if they existed at the date of your proposal, they should be included.

      Reply
  58. Georges W.

    What happened when somebody failed to continue paying the consumer proposal specefically in the second year from 5 years term? I ve just found that is mentionned CP failed in my credit report.
    i have the intention to renogotiate my debts with the creditors and avoid to go again to the CP,when this happened , do you think that my credit becomes good again, thank you

    Reply
    1. J. Douglas Hoyes Post author

      Hi George. If you fail to make your consumer proposal payments the proposal is annulled, and all of your debts return. If you make payment arrangements with your creditors and pay them off yourself, then yes, eventually your credit will improve.

      Reply
  59. CAROLINE

    I didnt have choice to go for consumer proposal after my separation…its been a year and a half now that im paying for my consumer proposal and i still have 3 years and a half to go…i kept my car and my mortgage…my payments are up to date. My mortgage is due to be renewed in july 2017 but my ex is actually on my mortgage and he told me to remove is name of the mortgage. He filled bankruptcy but because im paying the mortgage i guess his name is staying on the house and he couldnt include the mortgage in is bankruptcy. Will i be able to get the mortgage on my own while on consumer proposal. I know with my salary and the equity of the house in 2017 i would qualify if i would not be in consumer proposal

    Reply
    1. J. Douglas Hoyes Post author

      Hi Caroline. The short answer is “probably”, but it depends. In general, a mortgage lender will renew your mortgage when it matures, provided all of your payments are up to date, even if you are in a consumer proposal. However, every mortgage lender has their own unique policies, so I would suggest that a few months prior to renewal you contact the mortgage lender and confirm that everything is on track for your automatic renewal. If not, at that time you may want to talk to a mortgage broker to review your options. You should also discuss with your ex, or your lawyer, having your ex’s name removed from the property, so that all future increases in the value of the property accrue to you.

      Reply
  60. JS

    My partner and I filed a 4 year Consumer Proposal in Dec 2012, and paid it off in Sep 2014 (28 months early), and have since moved provinces and have made a fresh start, both my partner and I being hired into well paying jobs soon after the CP was filed (by shear luck). We have since sold our home, moved into a rental home, successfully applied for a secured credit card ($3000 GIC secured) through our new bank (we changed banks whilst proposal was being filed) and have been accepted for financing on a new vehicle at a reasonable rate (8.9%). All this I am hoping will help build our credit rating in a short time. At the time of filing the CP, we had not yet missed any creditor payments (car loans, credit card payments, mortgage, nor bills) and were advised to enter into a CP as a precautionary measure due to my partner being laid off and myself having to change to a lesser paid job, meeting payments had eaten up our savings. My question is: We are looking to be accepted for a new mortgage in our new home town, and although I realize it is luck of the draw for acceptance due to being cleared of the CP for only 1 year, what are our chances of success? We are both high earners and will have a substantial down payment. Thanks.

    Reply
    1. J. Douglas Hoyes Post author

      Your chances of being approved will depend on the lender. As a general rule, lenders like to see you be “two years clear” of your last consumer proposal payment. However, if you have high income, and have re-established credit, and have a suitable down payment, your chances of acceptance are increased. I would suggest you ask around and find a reputable mortgage broker in your new city, and ask them what is required to qualify. They may suggest waiting, or building up a higher down payment, or some other strategy to ensure that you are both accepted and that you can qualify for a reasonable interest rate on the mortgage.

      Reply
  61. Lynne

    I completed a 3-year Consumer Proposal in October of 2011. I have since obtained a mortgage, and a secured credit card, with the security on the card being released last summer. I pulled a credit report, and saw that my old debts from before the Consumer Proposal were still listed. Will they stay there indefinitely? Some web sites state that the Consumer Proposal will “automatically purge” after three years – does that mean the debts linked to the CP as well? Anyway, my rating is lower than I had hoped it would be (594/”Fair”). I’m looking to improve it, and will need to finance a vehicle soon. Any suggestions? Thanks in advance.

    Reply
    1. J. Douglas Hoyes Post author

      Hi Lynne. You are correct that the credit reporting agencies purge a consumer proposal three years after completion, so I suspect that if you look in the “Legal Items” or “Registered Items” section of your credit report you will not see the consumer proposal.

      However, individual creditors will often maintain six years of history on your credit report, so that is presumably why they still show on your credit report (probably with a note that says “included in proposal” or something similar).

      Your credit score should continue to improve as the consumer proposal fades more into the past, and as you continue to make your mortgage payments. Unless you intend to borrow more, I wouldn’t worry about your credit score. If you do need a higher credit score, you could apply for another credit card or line of credit, which may increase your score if approved. However, it is important that you don’t incur significantly more debt, as that will only harm your credit in the future if you are unable to repay it.

      Reply
  62. Bill A.

    Hi and first of all, Thank you for this site with all the information!
    I have completed 3 yrs of a 5 year consumer proposal which the only person I owed money to was CIBC, question is; I have 3 GIC’s (From CIBC) totally $5000.00 and really need approximately $3000.00 for medical expenses. Can I contact CIBC to cash in two GIC’s even though I no longer have an account with them or can they “Keep” my money when I try to cash them in? When I filed the proposal they were there and not touched but could sure use them now. Please advise and again, Thank you!

    Reply
    1. J. Douglas Hoyes Post author

      Hi Bill. The short answer is that in a consumer proposal you are permitted to keep your assets, including your GICs, so there is no legal reason that you can’t cash in the GICs. So, if you need the funds, there is no legal reason why you cannot cash them in. If there are issues you can ask your trustee.

      Another point to be aware of: many GICs are “locked in”, meaning that if you cash them in before they mature you lose some or all of the accumulated interest. You will want to confirm this before cashing them in. This has nothing to do with the proposal; it’s standard in most GICs.

      Reply
  63. Robin

    Hi … I completed my consumer proposal 2 years ago and as I understand it, that leaves me 1 year until it is purged from my credit account. Can you tell me exactly what that means? How is it purged? What creditor continue to see? Once it is purged will it have an immediate affect on my credit score? Lots of questions, but thanks in advance for your help!

    Reply
    1. J. Douglas Hoyes Post author

      Hi Robin. “Purged” means that after three years the note in the Legal Section of your credit report is removed, so it will not appear. Yes, that does have an impact on your credit score, but it’s impossible to say how big the impact will be, because your credit score depends on many factors (including your income, re-established credit, etc.).

      Each individual creditor that was discharged in your proposal will also report that you filed a proposal and that the debt was included in the proposal, and those notes may appear under the individual creditor’s name for up to six years.

      Reply
  64. angela

    Hello!
    In December I completed my consumer proposal. I was able to obtain a Canadian Tire MasterCard. However they only report to one credit union, not Equifax. I do NOT want to apply for another card, even a secure one. Will my score with Equifax go up on its own despite not having CT report to them? Or do I need a company to report to them to help it go up?
    Also I am in the market to buy a vehicle. I will have a strong co signer with great credit. Is there a chance I would be accepted with the help of a co signer? I have full time employment with decent income
    Thank you for your assistance.
    Another thank you for the companies assistance throughout my proposal. I am excited to start my chapter in life and thrilled I no longer need your services =-)

    Reply
    1. J. Douglas Hoyes Post author

      Hi Angela. These are good questions.

      Your credit score is impacted by credit that reports to the credit bureau, so it CT doesn’t report to Equifax, it won’t impact your score. (As an aside, I have seen CT on many Equifax reports, so it may be just a matter of time before it shows up). Your credit score will improve with time as your proposal falls farther into the past, so it may not be an issue for you.

      If you have a strong co-signer there should be no problem financing a vehicle.

      I’m glad your proposal was successful; best wishes for this new chapter in your life!

      Reply
  65. Heather

    I am in my first year of a 5 year consumer proposal. I moved in with my partner, who has a very large salary, about 6 months after I started paying the CP. He is offering to pay off the remainder of my CP so I can work on restoring my credit. Is this a good idea?

    Reply
    1. J. Douglas Hoyes Post author

      If your partner has lots of cash and can afford to give you the money to pay off the proposal then yes, it’s a good idea. Some thoughts:

      If your partner will have to borrow to give you the money to pay off your proposal, it may not be a good idea, because they are now paying interest to pay off a consumer proposal that has no interest.

      As for restoring your credit: a proposal remains on your credit report for typically three years after you pay it off, so the sooner you pay it off, the sooner it will be removed from your credit report, so paying it off early will help.

      Reply
  66. Brenda

    I have a few questions for you..
    I am currently 6 months into a 5 year consumer proposal. Our mortgage was renewed 4 months ago no problem. An opportunity has come up at work that could see me transferring to another city. Is it possible to port our mortgage to the new property or will we have to be re-approved for a new mortgage? If we do have to be re-approved, Is it possible to use my income towards our gross household income without me actually being on the mortgage? I fear that my CP will hinder our ability to be approved for a new mortgage.
    We when sell our current home we should be left with around $40,000. Is it smarter to use this money towards the new down payment or use it to pay off my CP thus starting the 2 year waiting period that much sooner?
    I attempted to get a secured credit card from CIBC and was told that because of my bankruptcy I would not be approved. I gave up trying to explain to them that this was not a bankruptcy. I have since obtained a secured card from People’s Trust.

    Reply
    1. J. Douglas Hoyes Post author

      Hi Brenda. These are great questions. You should book a meeting with your consumer proposal administrator and ask them these questions. They are most familiar with your situation, and can give you the best answers.

      As for whether or not you can port your existing mortgage to a new property, that will be up to your mortgage lender. If they operate in your new city, and if the new house has sufficient equity, they may be willing to do it; it would be up to them.

      Personally, I am a big believer in getting out of debt. The advantage of selling your house and paying off your consumer proposal is that you are out of debt, and your credit does start rebuilding that much sooner. You could pay off the proposal, move to the new city, start saving money, and but a house in the future. Your mortgage lender could explain in more detail what would be required to port your existing mortgage, or to qualify for a new one if you pay off your proposal.

      Reply
  67. Niki

    Hi there,
    I was trying to find something for a while but have had no luck, so hopefully you can enlighten me a bit about this situation here. I have a friend of mine who had started a consumer proposal a few years ago, but due to defaults, it was annulled. He eventually was able to do a second consumer proposal after going to court (I believe?) and explaining why he was not able to fulfill the first one. The 2nd one included the first CP’s debts and some more.
    Now, he paid off his 2nd CP last year and both of them show on his credit bureau. I know the fulfilled CP should disappear from the bureau after 3 years, but what about the first one? His trustee sent him a letter advising that the two proposals are related, and I told him he should probably send that to equifax so there could be a mention on his file or something. Unfortunately, I think he would rather wait it out, but I think it might become a problem if he doesn’t act, now that he’s trying to get back on track.
    How long after the annulment does a CP stay on a credit file?
    Thank you!

    Reply
    1. J. Douglas Hoyes Post author

      Hi Niki. In general, legal information remains on a credit report for six years. A completed proposal remains on the credit bureau for two years. So, it is possible that the first annulled proposal will remain there for six years. I agree with the trustees approach of sending a letter to the credit bureau and advising them that the two filings are related, and asking them to remove the first one, although it is up to them whether or not they will do that.

      Reply
  68. Joan

    Hi,
    This coming August, I will be entering my last year of my consumer proposal (CP). I would like some advice as to what is the best way to rebuild my credit. I have been paying my OSAP loan for approximately 6 months. Am I correct in saying that my OSAP loan may not be helping me in re-establishing my credit rating since I am still in the CP (in addition to the fact that I haven’t been making payments for a significant amount of time)?. When having asked other professionals for advice, I have been instructed to get secured credit card a.s.a.p. as this will help me develop my rating. Will a credit card start improving my rating now? Are my OSAP payments improving my rating now? Should I strive to pay off my CP as early possible? My logic tells me to pay the CP early so I may begin the 3 year period for which the CP remains on my credit score. Appreciate your help.

    Reply
    1. J. Douglas Hoyes Post author

      Hi Joan. These are good questions.

      In most cases the government does not report to the credit bureau, so it’s unlikely that your OSAP student loan is having any impact on your credit rating, good or bad. To find out for sure, you can order a copy of your credit report from Equifax or TransUnion (send in the application by mail so you don’t have to pay for it; you are entitled to one free credit report per year); if your OSAP does not appear on your credit report, you will know that it is not impacting your credit score.

      As for paying off your consumer proposal early, yes, you are correct: your proposal will remain on your Equifax credit report for three years after you pay it in full, so the sooner you pay it, the sooner it will be purged from your credit report, which will improve your credit score.

      Your credit score will be improved by having credit, and using it responsibly. A secured credit card will have an impact on your credit score, because in most cases it will be reported as a credit card, not as a secured credit card. The impact on your credit score will depend on the size of the card. A credit card with a $500 limit will have much less impact than a card with a $2,000 limit. If improving your credit score is important, once your proposal is paid in full you could apply for another card or loan. Having two new forms of credit will have a positive impact on your credit score, provided that you use them responsibly and pay them in full each month. Your consumer proposal administrator can give you more advice on which cards and loans will be best for you in your situation.

      Reply
  69. jennifer

    Your information has been very informative but hasnt answered all of my questions. I will try to keep this as short as possible. I had a bankruptcy in 2006. I was discharged in 2007 and quickly rebuilt my credit. I have many credit cards. A very extravagent family vacation had my cards racked. Along with that i had a brand new financed jeep and harley. Everything was in my name and my husband of many years split on my kids and i. Being that if i stayed in the job i had at the time I would end up bankrupt I rented out my house packed up my kids and moved to Alberta where I have done very well for myself. Making well over $100000 my first year here. During this year i managed to pay down my credit cards. I ended up getting involved with a guy who unbenounced to me racked up over $20000 on my credit cards and i also cosigned for him to get a jeep. As i had a beacon of 700 it was no problem. He made no payments on the jeep so i kicked him out and reposessed the jeep. So now i have racked credit cards again 2 jeeps that i pay about $1300 a month on and a harley…plus mortgage in bc. Wellll….i make all my payments but my credit cards are maxed. I signed up for a rent to own house and invested $10000 initially. 2 days later i got laid off….oil prices ugh. I was off work for 3 months but managed to make all my payments including $2600/mnth for rent to own. I am now back working but barely. I was working 80-90 hours a week before and now 30-50 hours a week. I am now falling behind due to the lack of hours and 3 month lay off. I will be getting 2 large payday loans this pay period to pay my rent As i was off for almost 2 weeks. i will be lucky if i make $70000 this year. I have 3 teenagers that i am constantly telling how important good credit is and im now in a possition where i am looking at a CP. I want to take responsibity for my debt but Im failing and its killing me. With a $70000/year income i will not get approved for the $560000 house im locked into either so i will have to walk away from my $10000. I have equity in my bc home but still qualify for CP. What do you suggest….go for the CP or second mortgage and repair and rebuild my credit. I still have R1’s but this next month i will fall behind. I really want to buy this house and im hoping next year will be better…fingers crossed that oil prices go up.

    Reply
    1. J. Douglas Hoyes Post author

      Hi Jennifer. The short answer is that given a choice, less debt is better; it’s less risky, and less stressful. Since you are not living in your house in BC, unless you plan to return their soon, the obvious answer is to sell the house and then use the equity to pay off your debt. If the equity isn’t large enough to pay off all of your debt, it could form the basis for a consumer proposal.

      The advantage of the consumer proposal is that it deals with your unsecured debt. Getting a second mortgage doesn’t reduce your debt, it just switches it from the high interest credit cards to a hopefully lower interest rate second mortgage.

      To help you make the decision, you should consider what happens if your income falls again in the future. With less debt, you are more secure.

      My answer is somewhat generic, so I would suggest talking to a consumer proposal administrator in Alberta to review all of the math with you (debts, income, and value of your real estate), and that process will help you make the correct, informed, decision.

      Reply
  70. jennifer

    Me again. Ine more quick question. My beacon is below 600 now is there anyone that would possibly grant a second mortgage for less than 10%. If i could clear up this credit card debt i know id be ok. Or can i increase my beacon while in a CP if I keep both jeeps (5 years remaining on each)

    Reply
    1. J. Douglas Hoyes Post author

      Hi Jennifer. The lower your credit rating the more difficult it is to get a mortgage at good rates. Your income and your debt level will also factor into the equation. The only way to find out for sure is to talk to a mortgage broker or banker and see what you may qualify for.

      Credit ratings generally don’t increase while you are in a consumer proposal, because the proposal has a significant negative impact on your credit score. However, it also eliminates your unsecured debts, so that when you are done your proposal you can rebuild your credit score very quickly, and keeping the payments current on your jeeps will help this. However, keeping up the payments on two jeeps doesn’t make sense if you only drive one and if you file a proposal, so you would probably surrender one or both of them when you file your proposal to eliminate that monthly payment.

      Reply
  71. George

    HELLO..Im almost 1 year out of my proposal..i got a unsecured credit card wich i was totaly shocked..ive used it twice and paid it off in full..along with every thing paid on time (utilites mortgage .ect) will this boost my credit score and get me in the fair column or better with the proposal still on my report for 2 more years i continue to use the card and pay it in full..thanks

    Reply
  72. Mike

    Both my wife and I filed Consumer Proposal’s at the same time. We have just over one year left in the 5 year proposals. Our financial situation has changed dramatilly in our favor the last 2 years as we have both doubled our income. We have about $100,000 in equity in our home. We have been paying extra on the Mortgage, reasoning being that we don’t pay interest on the proposal. Perhaps in hindsight we should have paid of the proposal sooner?

    However, it appears that our Roof requires about $12,000 worth of repairs this summer, as well as some fencing and other minor repairs.

    I applied for and received a Capital One credit card one year ago, I was prepared to secure it, but they gave me one with a $4000 limit with no security. I have never missed a payment or been over limit and keep it close to paid off.
    .
    My question is: Will we be eligable for a secureed Home equity line of credit or home equity loan. And if we are, would we be wise to pay off the proposal as part of the equity loan?

    Thanks,

    Reply
    1. J. Douglas Hoyes Post author

      Hi Mike. I don’t know if you are eligible for a secured home equity line of credit or loan. You would have to ask the lender.

      In general, you will get better interest rates once your proposal is completed. So yes, to answer your question, if you had used your extra income to pay off your proposal early, you would be in a better position now to obtain the financing necessary for your roof repairs. I have two suggestions:

      First, talk to your consumer proposal administrator and get their advice. They may know of a lender who will lend solely based on house equity, regardless of the proposal. The lender may suggest borrowing enough to do the roof repairs and to pay off the proposal.

      Second, perhaps you defer some mortgage payments (since you are now ahead on the payments) and slow down your proposal payments to free up enough money over the next few months to do the roof repairs without the need for additional borrowing.

      Reply
  73. Suezyc

    I am thinking about filing a proposal. I have a few questions:
    Since my major debt is with a credit card which is associated with my bank account as well as, overdraft, should I be opening a different bank account before?

    If my car loan is up in a year and I file a proposal before, would I be able to get a further loan for another vehicle?

    How long after paying off a proposal can you apply for credit?

    After 3 years with an R7 rating (and suppose that you pay off your proposal in those 3 years) what will your credit rating be? Do you need to disclose that you had a proposal? What about places like Bell Canada (cell phone), Hydro, Gas ect. are these affected (supposing they are paid on time)…will these places check your credit report from time to time? If they see a proposal can they cut you off?

    Reply
    1. Ted Michalos

      We tell everyone to open a new bank account with a bank (or financial institution) they haven’t been dealing with already. A new account at a different bank is the best way to protect yourself.
      You may have difficulty changing lenders – you should be able to renew with your current lenders (as long as you haven’t had payment problems), but it may make more sense to approach them now, before you file, to see if they will extend your loan. Given current interest rates you may even get a deal…
      You are permitted to apply for new credit even while you are in your proposal – of course, you are not likely to be approved for any unsecured credit. The fact that you filed a proposal will stay on your credit report for 3 years AFTER you complete your proposal. Most people are able to be granted new credit after about 18 months from completion. The best thing to do is speak to your new bank after you file and ask them what they’d like to see you do in order to be approved when you have completed your proposal.
      If anyone ever asks you in the future, “have you filed a proposal?” the answer will always be “yes”. Of course, I have never seen that question on a credit application – they ask about bankruptcy (and you can answer no to that (unless you have also filed for bankruptcy), but not proposals.
      I hope these answers help…

      Reply
  74. Angela

    Me again..
    I have been using a CT mc and paying it off in full each month. I completed my CP in December of last year (2014). I had previously asked if I would be able to secure a vehicle loan with a strong co signer. I checked my credit and I am one point away from being on the fair credit score bracket with Equifax. (559 now, 560 Is fair) That being said would I be able to secure a loan on my own despite the proposal only being completed in December but having a fair credit score, or would it still be in my best interest to get a co signer to help get approved for a loan? Also is my credit score increasing fairly quickly due to responsible credit use or does it also have to do with the fact my CP is paid off, and each month that passes puts it further in the past? I have asked Equifax this question and they don’t have an answer.

    Reply
  75. Zoly

    I am thinking about filing a proposal. I have a few questions:
    after the proposal if me and my wife want to get a mortgage and she would be the main applicant and me like a co-signer,how is my credit rating would affect the the application since she has a good credit?

    Reply
    1. Ted Michalos

      If your wife’s credit is “good” and you are simply the co-signer then the fact that you have filed a consumer proposal should not have a dramatic affect on your mortgage terms. I suggest you speak to either a mortgage officer at your bank, or a mortgage broker BEFORE you decide to file a consumer proposal to confirm what I am saying is true. That way you will know from the lenders how they will view your consumer proposal.

      Reply
  76. Dave

    I filed a consumer proposl in October 2010, Discharged in July 2012 and everything has now been remover from my credit reports. My credit score is now in the mid 700’s with no derogatory items and I would like to apply for an MBNA mastercard. Would MBNA consider my application now if they were included in my consumer proposal? Thank You

    Reply
    1. Ted Michalos

      You know, no one has ever asked us to track as soon you can return to a creditor that was included in a proposal or bankruptcy after you have completed the procedure. I guess my question is why bother? Is their product that much better than everyone else’s that you want to return to them? I am just saying, shop around… If you do apply let us know how you make out and we’ll post your experience so others can benefit from it.

      Reply
  77. Mike

    Hello!
    I am thinking about filing a proposal and I have question.If I’m in process of buying a car I added my son to be cosigner in order to get credit from bank in 0% interest rate and I got approved for term of 7 years but with deal to come back to delership and renew my rest six years with new application should I be worry when bank see that I filled consumer proposal in mean time paying off my first year?Or just relay on my son good credit score in order to get same interest rate for next six years?Thank you.

    Reply
    1. Ted Michalos

      I have never heard of a loan that requires you to come back with a new application after the first year. The loan either has a 7 year term or only a 12 month term. If it has a 12 month term then they can refuse to renew the loan (especially at 0% interest) and you will have to scramble to find a new lender. Even with your son’s good credit you may get slammed pretty hard in 12 months when you re-apply. Be careful…

      Reply
  78. Laurie

    I finished a consumer proposal in October of 2014 (after 3 1/2 yrs – proposal was for 5). I don’t have credit cards as of yet, but hopefully I will in the near future. I do however, have a car loan with a major bank (the one I deal with) and I managed to get the loan at 9.9% and I thought considering my circumstances that was a pretty good rate. This was 8 mos. after I was discharged. I just want to let people know that there is life after a proposal!

    Reply
  79. Layna

    Are you supposed to pay for a consumer proposal before it is approved? I was asked to for months before the creditors voted and would have rathered saved that money for a rainy day…is this typical and why was this asked of me?

    Reply
    1. J. Douglas Hoyes Post author

      Layna: While there may be exceptions, in a typical consumer proposal you would be required to make a payment each month. Creditors have 45 days to advise the consumer proposal administrator if they object to the proposal. If they don’t, the proposal is accepted, so it would be unusual for you to be paying for months before the proposal is accepted. I would suggest you make sure that you were dealing with a licensed trustee, and not just a company pretending to be a trustee (there are lots of them out there). You can use this link to do a search to confirm that you are dealing with a licensed trustee: http://www.ic.gc.ca/app/osb/tds/search.html?lang=eng

      Reply
  80. Nancy

    Hello. We r on process of going thru consumer proposal. Like change bank, direct deposit etc… My question about my hubby’s rsp His is at royal bank. Will they touch rsp? Or it’s best we change rsp to new bank?

    Reply
    1. J. Douglas Hoyes Post author

      Hi Nancy. Once your husband files a consumer proposal his assets are protected, so the bank is not allowed to take it, so there is no legal reason to move your RRSP.

      However, since you are opening a new bank account and severing your relationship with your old bank, from a practical point of view it is easiest to move all of your banking to the new bank. You can contact your new bank and they will contact the old bank and move the RRSP for you, so it is not a cumbersome procedure for you, and in most cases that’s the best option.

      Reply
  81. Scott

    I was thinking about a second consumer proposal due to financial hardship again. I have been discharged and fulfilled my first one. Does the terms change or length on my credit score change the second time you file for a consumer proposal?

    Thanks,
    Scott

    Reply
  82. cindy

    would a consumer proposal have any affect on sole proprietorship?
    do to an illness I have had to apply for LTD and not sure when or if if ever that I will be able to return to my same employer. I do not want to stay on LTD and therefore I have been looking for alternatives for employment. Since I have several years of experence & education, I was hoping to do business on my own. May I apply to start my iwn business as a sole proprietor if I have completed a consumer proposal?

    Reply
    1. J. Douglas Hoyes Post author

      Hi Cindy. Yes, you can start a business either during or after a consumer proposal. The only issue will be that if you need to borrow money to do it, it may be more difficult to borrow initially. If you are not borrowing money, than you can start either a sole proprietorship or corporation with no issues.

      Reply
  83. Jennifer

    Hi
    I’m currently in a consumer proposal and have been for almost 5 years so I have about 2000 left to pay off but in that time I now have 25000 debt again I don’t want to declare bankrupcy but I was told I need to pay off my current consumer proposal before intering into a new one but i can’t come up with that amount
    I make about 3000 month from 2 jobs 1 part time 1 full time
    I was told that anything in Ontario more then 2000 tthey will take 1/2 so for me I’d pay 500 a month for 21 months but that’s a lot for me still because I gave a lein on my car and can’t include that in the bankrupcy so I’d still pay for that as well if I want to keep my car also I live on my own and don’t have kids or a spouse but I owe a lot in personal loans to my mom and brothers but I can’t get 2000 to pay off my consumer proposal I tried
    My car is 2007 worth 3500 the lein is 250/month
    I really want to get another consumer proposal is there anyway I can do that ? Go through a court or something
    I was told personal loans to friends plus family is not included why I been making payments to them monthly please help I’m so depressed over all this
    Thank you for your time
    Jennifer

    Reply
    1. J. Douglas Hoyes Post author

      Hi Jennifer. You are correct, you must complete your first consumer proposal before you can file a second one. Your best option may be to complete your monthly payments and then start the second proposal.

      You could theoretically go to court and ask for permission to file a second proposal before the first one is completed, or you could file a proposal under Division 1 of the Bankruptcy & Insolvency Act, but both of those options are risky and would probably cost you more than $2,000 in legal fees and time, so that is not recommended.

      If you are still confused, we suggest you either book another meeting with your current consumer proposal administrator to review your options again, or consult with a different trustee if you want a fresh perspective.

      Reply
  84. onlyson

    Hi, my consumer proposal will be finished in a year from now, how would I know if my payments to trustee disbursed to my creditors? Thank you for your time, and your blog is really helpful!

    Reply
    1. J. Douglas Hoyes Post author

      Your trustee should be sending you a copy of the Interim Statement of Receipts and Disbursements every time a dividend is distributed to your creditors. If you haven’t received it, contact your trustee and ask for the most recent statement. Depending on the size of your proposal payments the trustee is probably distributing funds at least twice a year, so if there is only a year to go some distributions should have already gone to your creditors.

      Reply
  85. Stefan

    Hi – I just paid off my proposal and am waiting for my certificate of completion to arrive. My mortgage is coming up for renewal in 17 months and I want to build my credit up as fast as possible. I recognize it takes up to 2 years before banks consider me again after a proposal. My question is this: I own two cars outright. One is 3 years old and the other is 5 years old. Is it worth it for me to get a small loan of $3000 to $5000 on one the cars that I can pay back over 2 years to help rebuild my credit? I also intend to get a secured credit card for a similar amount and pay in full every month. Is this a good idea? Are there other ideas that make sense? Thanks.

    Reply
    1. J. Douglas Hoyes Post author

      Hi Stefan. Congratulations on completing your proposal.

      If you already have a mortgage, it is likely to be renewed with no issues (since the lender has already lent the money, and you already have a good payment history), so it may not be necessary to do anything. I would suggest you wait for two months to ensure your proposal completion shows up on your credit report and then get a copy of your credit report to see where you are at.

      Getting a car loan and a credit card will likely improve your credit score, but of course you also end up paying interest, which may be counter-productive. However, if you think you need to improve your credit score, your strategy would probably work, provided you don’t miss any payments.

      Reply
  86. Angela

    Hello
    I wanted to post a comment to maybe give insight to someone.
    This Dec marks one year post discharge from a cp. My credit score is fair and I have two unsecured cc with healthy limits. I recently went to apply for a car loan and was denied by in house financing. Td offered me rates between 19-30%! I added a Co signer with good credit and td refused to offer me a loan at a better rate. My options are bleak as no other “big bank” will offer me a loan with a Co signer. I have banked with td for years and it’s upsetting they will offer me business at a high rate but refuse it at a decent one.. I will post an update at a later time if things change.

    Reply
  87. Mahani L.

    Hi, I finished my payment for consumer proposal and received the discharged letter a couple of weeks after.

    How can I apply for a credit card to help rebuild my credit.

    Reply
  88. Joe

    Currently in a Consumer Proposal plan, due to have paid off this summer. When the proposal was filed 1 unsecured credit card was paid off in full and the card surrendered to the trustee. I still get monthly statements from this card with a $0 balance, when I called them they advised the account is still active just suspended from issuing a card due to the proposal. When I make my final payment and get the paperwork, is it possible to re-obtain this card? Will the credit history revert back to the original issue date for length of credit?
    Curious, mainly because our mortgage company has already advised they may not renew our mortgage Feb/17 because of the CP. Hence why I have been focused on paying off the CP and try to re-build prior to renewal.

    Reply
    1. J. Douglas Hoyes Post author

      Hi Joe. In most cases all unsecured credit is eliminated as a result of filing a consumer proposal. It will be up to the credit card company whether or not they decide to advance credit to you once the proposal is completed, and it will be up to them how they report it on your credit report, so that’s not a question we can precisely answer.

      Reply
  89. Matt

    Hi. Thanks for all the great info guys. This is more of a statement then a question. I just find it weird that a consumer proposal will be wiped from your credit history after your discharge from it but if the trusty makes a payment on your behalf on one of the last days before your discharge then that lender could possibly show up on your report for 6 years after your discharge. That really sucks! I had a consumer proposal discharge a little over a year ago. I’m thinking about buying a brand new truck but I want the 0.9 percent financing which makes a big difference to the payments. I was considering waiting until my 3 years post discharge so I could secure the .9 financing but I think a couple credit cards and line of credit will be on there for 6 years for the last time that account was active. I’m just debating weather or not I should get my mom to consign for me for the truck? Will I secure the .9 percent financing with my mothers good credit even only being 1.5 years discharged or would I be better off waiting the full 3 years from discharge knowing that even when the cp is wiped clear I may have couple credit cards and line or credit that may show up for an additional 3 years and that may impact my .9 percent financing. I have a 6 figure/year income so I’m not too worried about getting a loan but rather wondering if I should use my moms credit now and get the truck or wait until the 3 years is up and try then either with or without my mom. What should I do to get the .9 percent financing??

    Reply
    1. J. Douglas Hoyes Post author

      Hi Matt. That’s a difficult question to answer, because the decision is up to the lender. The lender may decide that because the proposal is over, and you have a good income, they will give you a good interest rate, even though the consumer proposal still appears on your credit report.

      In general, having a good co-signer should get you a better deal, so if you want to finance the truck now, and if your mother is willing to co-sign, and if you are sure that you won’t miss a payment (because you don’t want to impair your mother’s good credit) then you can probably qualify for the good interest rate now.

      Reply
  90. mark

    Question: I just paid my consumer proposal last week in full and planning to get a mortgage with my co-worker with great credit score. I am wondering if that would be possible or if we have a good chance to get pre-approved?

    Reply
    1. J. Douglas Hoyes Post author

      Hi Mark. Being approved for a mortgage depends on many factors, including the amount of your down payment, your income, and the co-borrowers credit history. You would improve your chances of qualifying by taking some steps to improve your credit now that the consumer proposal is over, such as getting a small credit card or loan. Your consumer proposal administrator can advise you on the specific steps you can take to rebuild your credit.

      Reply
  91. Alex

    I’ll be able to pay off my consumer proposal in the next 2 weeks. After that’s finished I have no other debts. I make approx. 34.5k a month. I rent an apartment and my other payments are Internet, phone, hydro that I was always making on time. I have no savings because all is going to pay off the proposal. I don’t have a co-signer. What are my chances of getting a car loan or financing from a dealer?

    Reply
    1. J. Douglas Hoyes Post author

      Hi Alex. You have a good chance of getting car financing when your proposal ends, but it may be at a high interest rate. There are some steps you can take to increase the chances that the loan will be at a better interest rate, starting with saving up some money for a bigger down payment. Waiting for a few months until you have a bigger security deposit should lower the cost of the loan. Another step you could consider is re-establishing credit with a secured or unsecured credit card, which should ultimately help your credit score and will lower the cost of future borrowing.

      Reply
  92. JS

    I have a few questions regarding Mortgages and CMHC fees post CP, if I may. My wife and I settled our 4 year Consumer Proposal in September 2014 – 28 months early due to good fortune in jobs. We are now nearly 20 months clear of settling the CP, and are earning high 6 figure combined salary, and are wanting to now get a mortgage to buy property. I have been to my bank to get a pre-approval, and when filing this they noted that I had 2 account entries on my Trans-Union credit file, which stems from a vehicle which was voluntarily repossessed at the beginning of the CP, and was included in it. In my Equifax credit report, it states that the vehicle was involuntarily repossessed, and still has a $42,000 balance against it, which is totally incorrect. I am led to believe from the bank that this has now been rectified on my behalf, and the accounts have been merged into 1 and my credit score will have been positively adjusted. If (I am hoping) the bank gives us a positive pre-approval for the lending, what do you think CMHC will ask for as a down payment for mortgage, considering we have been released from the CP over 19 months ago and are good earners? We have 10% saved, but would be hoping for only the required 5% down. Also, with credit scores of 595 (me) and 662 (wife) under Equifax and 630 (me before adjustment) and 720 (wife) under Trans-Union, are these favorable for mortgage approval and CMHC deposits?
    Thanks for your advice, and if I might speak for everyone who has used your services and taken up your free time, thank you for all you do. Appreciated.

    Reply
    1. J. Douglas Hoyes Post author

      Hi JS. I’m not an expert in CMHC, but my understanding is that the down payment will have more to do with CMHC insurance than the proposal. According to CMHC’s website:

      Typically, lenders require mortgage loan insurance for loans made to anyone that wishes to purchase a home with a down payment of less than 20% of the purchase price. However, lenders sometimes require mortgage loan insurance for homebuyers even if their down payment is greater than 20% of the purchase price.

      Ultimately it will be up to the lender and CMHC, but my assumption will be that with only a 5% down payment, CMHC insurance will be required, even if you had not filed a consumer proposal.

      Reply
  93. Linda

    Hello there,
    I just finished paying off my consumer proposal at the end of March 2016. I received a bonus at work and payed the remaining balance of my student loans off as I didn’t think that it would would covered by my consumer proposal. However now I just received an outline of what will be paid out and my trustee said that around 2k is to be paid to the student loans which will be sent to them May 30 2016. Since they have already been paid off by myself, what happens to that money being sent to them on my behalf? Will I be refunded that money? Please advise. Thank you!!

    Reply
    1. J. Douglas Hoyes Post author

      Hi Linda. This is a question you should ask your consumer proposal administrator, since they have your file, and without full information I cannot give you a precise answer.

      I would suggest that you advise your trustee that you paid off the student loan in full, and ask your trustee to request an updated proof of claim showing the full amount owing on the student loans. If they have received more than the full amount owing, they would be required to refund the money to your trustee.

      Reply
  94. reagan

    I need to know where I can get a new credit card when it has been one year since I’ve paid off my consumer proposal. I need to know where I can get a non secured credit card?

    Reply
  95. chris

    hi me and my wife paid off consumer proposal after a month we try to get a car loan in a third party lender and got approve after that we apply for capital one and got approve for 5000 limit after six month we try to trade our car to a dealer for a new one is there a chance to get approved on this one. we are up to date to all our bill payments..

    Reply
    1. J. Douglas Hoyes Post author

      Hi Chris. Whether or not you are approved will be up to the lender, but yes, there is a chance, because your proposal is paid off and you have re-established credit.

      Reply
  96. Olivia

    Hi. My Proposal will be finished tomorrow (YAY!), which is 9 months earlier than scheduled.
    I am wondering what is the best and fastest way to rebuild my credit and how long with the proposal show up on my record.
    During the proposal I consistently paid my rent, cell phone, cable and internet bill with no late or missed payments at all…would that already be reflected on my credit report?

    Reply
    1. J. Douglas Hoyes Post author

      Hi Olivia. Congratulations on completing your consumer proposal!

      There will be a note in the “Legal” section of your credit report for three years after your last payment indicating that you filed a consumer proposal. However, you can start rebuilding your credit now. You could start by getting a secured credit card to rebuild your credit.

      To find out what’s on your credit report, contact Equifax and TransUnion for a free copy of your credit report.

      Reply
  97. Jeremy

    My wife and I paid off our proposal 8 months early and that was in Feb of this year. We got a secured credit card shortly before we paid off the proposal but now we are considering paying off our car loan 2 years early. I guess my question is how would this effect our credit? It is one a of the few things actually reporting credit for us and we are trying to re-establish our credit quickly as possible. Also I’ve been told by a few different people that if we were to start RRSP’s that banks will be more likely to look at us again is there any truth to that?

    Reply
    1. J. Douglas Hoyes Post author

      Hi Jeremy. There are many factors that impact your credit score. Having a car loan that you are making payments on is probably helping your credit score. Paying it off may also help, because your “utilization” would improve. As to the exact impact, I can’t tell you, because the credit bureaus don’t reveal their exact credit score formula.

      RRSPs don’t appear on your credit report, because they are an asset, not a debt. However, having assets does make you look like a better borrowing candidate. One option you may want to consider is getting a small RRSP loan, which may improve your credit score, and that also increases your RRSP value, which may also help.

      Reply
  98. Auge

    Hi. i have 1 more year of my 5 year consumer proposal. I wanted to know how do i start to rebuild my credit. Should i apply for a credit card now or after my credit proposal is finished. and i wanted to go apply for a car loan within the next year what would be the advice to help with that, so i am not having to pay high interest for the car loan.
    Thank you.

    Reply
    1. J. Douglas Hoyes Post author

      My standard advice is to get your consumer proposal paid off as quickly as possible, because the sooner it is paid off, the sooner it will be removed from your credit report. (In the “Registered Items” section of your credit report, Equifax leaves the note about your consumer proposal for three years after you complete your proposal).

      To rebuild your credit so that you can get a good interest rate on a car loan, you will want to re-establish credit with one or two new credit items, like a small credit card. You could get a secured credit card, or get a small credit card through your bank. In some cases they want you to finish your proposal first, so that’s why getting the proposal paid off as quickly as possible is the most important step you can take to rebuild your credit.

      Reply
  99. sue

    Hello, I have a quick -question I’m currently in a consumer proposal I just wanted to find out if I’m still able to get a payday loan or it will show that I’m in a proposal

    Reply
    1. J. Douglas Hoyes Post author

      You should immediately contact your trustee if you are considering getting a payday loan while you are in a consumer proposal. The purpose of a consumer proposal is to eliminate your debts, so if you can’t survive without getting a payday loan than the proposal is probably not viable.

      You should immediately contact your trustee.

      Reply
  100. Margaret

    Good Day, Mr Hoyes,

    I was wondering about something. I am approx 2 1/2 years into a 3 year Consumer Proposal. The other day, I got a call from my bank, and I have been offered a Pre- approved, no credit check Credit Card. I declared to them that I was currently in a consumer proposal, (without them asking whether I was or not), as well as I said that I am NOT applying for a card, but I will accept one if you (my bank) wants to issue me one knowing that I am still in a consumer proposal. Then I called the bank back a couple of days later, just to make sure this was okay, and told them the same thing again….I will not fill out an application, but knowing that I am in a consumer proposal, and if you are willing to offer me a credit card, I will accept it.

    My questions to you are in ‘caps’.
    1) AM I ALLOWED TO HAVE A NEW ‘NON SECURED’ CREDIT CARD WHILE STILL IN A CONSUMER PROPOSAL?

    2)EVENTHOUGH I WAS ‘NOT’ ASKED BY THE BANK, WHETHER I WAS IN A CONSUMER PROPOSAL, BY ME OFFERING THE BANK THE INFORMATION IN GOOD FAITH, IS THIS A GOOD THING, OR AM I OBLIGED TO OFFER THAT INFORMATION REGARDLESS WHETHER THEY ASK THIS QUESTION OR NOT?

    3)FOR A FRIEND, IF YOU ARE ASKED AT ANY TIME IF YOU EVER WERE BANKRUPT IN THE LAST 7 YEARS, AND IT WAS 10 YEARS SINCE THEY HAD BANKRUPTCY, CAN MY FRIEND LEGALLY SAY NO?

    4) ARE THE RULES OF CONSUMER PROPOSALS THE SAME IN ALL PROVINCES INCLUDING QUEBEC?

    Thank You,
    Margaret

    Reply
    1. J. Douglas Hoyes Post author

      Hi Margaret. Yes, you are allowed to apply for and get a credit card while in a consumer proposal, provided that the lender is aware that you are in a consumer proposal. Consumer proposals are governed by federal legislation, so the basic rules are the same in all provinces (in a bankruptcy there are different provincial exemptions, which may impact the amount you offer in a consumer proposal).

      As for your friend, if you were bankrupt 10 years ago, and someone asks if you were bankrupt in the last 7 years, the answer would be “no”.

      Reply

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