What Happens When You Commit to a Consumer Proposal (MNP 3 Minute Debt Break)

If you’ve been struggling under the weight of overwhelming debt and have finally decided it’s time to take action and get control of your finances – congratulations! Taking the first step can be difficult.


In fact, it can seem so daunting that many will assume a bankruptcy is their only route forward. While filing for bankruptcy may be a completely viable option for some, it’s not the only option out there. Speaking with a MNP Licensed Insolvency Trustee will give you a better gauge as to where you’re at, where you want to be and what routes you could take to get there. For instance, one very common step towards tackling debt, is filing for a Consumer Proposal.

The Bankruptcy and Insolvency Act or BIA, defines a Consumer Proposal as a plan to settle your debts with your unsecured creditors on a percentage of the total amount owing to your unsecured creditors. OR it’s a plan for an extension of time for payment. OR it could be both.

If you are working with MNP and we have filed the proposal on your behalf, payments to satisfy the Consumer Proposal are made to your MNP Licensed Insolvency Trustee, or LIT. The LIT will distribute the funds on a pro-rated basis to all of your unsecured creditors.

Flexibility is one of the major advantages of filing a Consumer Proposal. A Consumer Proposal can provide you with the flexibility of repaying your proven unsecured debts with monthly payments based on your income and your particular circumstances. Interest stops accruing on the date your Consumer Proposal is filed with the Office of the Superintendent of Bankruptcy. The repayment period is flexible and may be up to, but cannot exceed, five years.

After the completion of a Consumer Proposal, you have now permanently moved on from your past financial issues and are free of your unsecured debts. It is time to start rebuilding your credit rating. The Consumer Proposal will show on the Equifax and TransUnion Canada systems for three years from the time of completion.

One good way to rebuild your credit after a Consumer Proposal is to apply for an unsecured credit card and use the credit card for purchases you would have normally paid for in cash or by debit. Upon receipt of your monthly credit card statement, make a payment to the credit card on time and preferably in full.

Other ways to rebuild your credit include: avoid maxing out on your credit cards, use open accounts from time to time to keep them active, avoid late or missed payments, avoid withholding payments to a lender due to a dispute and limit the number of times you apply for credit and the number of inquiries you allow on your credit file.

Subscribe to MNP 3 Minute Debt Break on your favourite streaming service.

 Listen on Apple Podcasts  Listen on Spotify  Watch and listen on YouTube
 Listen on Google Podcasts  Listen on tune in  Listen on SoundCloud
Consultation icon