2026-06-11
Life after debt: What’s next and how to avoid repeating debt
What happens after a Consumer Proposal or a Bankruptcy? These steps can help you rebuild your credit rating and manage your credit effectively.
How Does a Consumer Proposal Affect My Credit Rating?
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A consumer proposal will affect your credit rating, but less drastically than Bankruptcy. While both options make it less likely that you will be able to obtain credit, a Consumer Proposal will only stay on your record for three years after your last payment.
What is a Credit Rating?
A credit rating in an estimate of how well a person meets their financial commitments, according to payment history and current loan status.
Equifax, one of Canada's largest credit bureaus, measures your credit score on a scale of R1 to R9. An R1 rating means you make payments on time, whereas an R9 means you have declared bankruptcy. If you have filed a consumer proposal, you will have an R7 rating—a very low credit score that will remain unchanged until your proposal ends.
How Does a Low Credit Score Affect Me?
Having low credit can create challenges that you may have not expected. You will be considered high-risk, so lenders will be reluctant to take you on as a borrower. If you are able to obtain credit, it will be expensive: lenders are unlikely to offer low interest rates to borrowers with poor credit scores. You may even find it harder to get a new job if a prospective employer seeks permission to check your credit history.
How Long Will a Consumer Proposal Stay on my Credit Record?
Equifax and TransUnion state that it takes three years for a consumer proposal to be taken off your credit score after a last payment. That means the faster you fulfill your obligations and pay off your debts, the sooner you'll be able to rebuild your credit rating.
Is a Consumer Proposal Right for me?
Consumer proposals are generally considered a less drastic alternative to declaring bankruptcy, but to qualify your total debts must be less than $250,000 (not including a mortgage) and you should have a reliable income to make monthly payments. A Licensed Insolvency Trustee can help you decide if a consumer proposal is the ideal fit for your situation. Get started today with a free confidential consultation.
Related Questions
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- How does bankruptcy affect your credit rating?
- What happens after bankruptcy?
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- What is a debt consolidation loan?
- What is a consumer proposal?
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