Life After a  Consumer Proposal – Can I ever qualify for a credit card? 

Can I ever qualify for a credit card after Consumer Proposal ? 

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By Taz Rajan, Bromwich+Smith staff | Reading time: 8 minutes | 1780 words | Last update 2023/07/20


A consumer proposal is a powerful option when it comes to debt relief solutions, and is one that many people are unfamiliar with. A Consumer Proposal in Canada, is a debt relief program that provides individuals with an opportunity to negotiate with their creditors and repay a portion of their debts over an extended period- typically 5 years. Many people want to know how it will affect their credit and how they can rebuild after filing, lets show you how.  

Understanding Consumer Proposals 

First thing is to understand what a consumer proposal does, and who can benefit. A Consumer Proposal is a formal process regulated by the Bankruptcy and Insolvency Act in Canada. It involves working with a Licensed Insolvency Trustee (LIT) who acts as a mediator between the debtor and the creditors. The LIT reviews your financial situation, helps develop a repayment plan, and presents the proposal to the creditors. Once accepted, you will begin to make monthly payments to the LIT, who then distributes the funds among the creditors. Once the agreed upon amount has been paid in full, the remainder of your debts which were included in the proposal are forgiven. It is important to note that not all debt can be forgiven, and your LIT will be able to explain which debts you are still obligated to pay in full.  

Consumer proposals provide several benefits and protections. They offer immediate protection against creditor actions including wage garnishments and daily collection calls and letters. This option allows you to keep your assets, unlike in bankruptcy, where assets may be liquidated to repay creditors. 

Debunking Myths about Consumer Proposals 

There are some common misconceptions surrounding consumer proposals. One being that consumer proposals permanently ruin credit ratings. In reality, while consumer proposals do have an impact on credit scores, this is a short term pain and in the long term they provide an opportunity for you to rebuild credit over time. 

Rebuilding Credit After a Consumer Proposal 

Rebuilding credit is very important after a consumer proposal. By adopting responsible financial habits which your debt counsellor will review with you during your program which include:  making timely payments, managing credit card balances, and maintaining a positive credit utilization ratio, you will be able to show potential creditors your creditworthiness and obtain credit.  

There is  life after a consumer proposal. You absolutely can and will rebuild your credit during and after your consumer proposal.  We have hundreds of clients that have gone on to have better credit scores than ever before, with the ability to buy homes, and get credit cards. We can help you do the same. We also have  several videos about factors that can impact your credit score for your reference. 

The Impact of Consumer Proposals on Credit Ratings 

Consumer proposals will affect credit ratings, but the impact is not going to last forever. The credit reporting agencies will include the proposal on your credit report, and it will remain there for three years after the completion of the proposal or up to six years from the time of filing whichever is first.  

Applying for Credit After a Consumer Proposal 

We understand that you may require credit during your Consumer Proposal. It may be more difficult to obtain- but is not impossible. Speak to your LIT for a list of secured credit card lenders they suggest. You may need to secure credit with higher interest rates, or use something as collateral for the credit.  

The Role of Credit Cards in Rebuilding Credit 

Credit cards play a important role in rebuilding credit after a consumer proposal. Responsible use of credit cards demonstrates the ability to manage credit and make timely payments.  

Qualifying for a Credit Card Post-Consumer Proposal 

To qualify for a credit card after a consumer proposal, several factors come into play. Lenders will consider the individual's credit history, income, and ability to make payments. It is important to research and compare different credit card options, as some lenders may be more willing to extend credit to individuals who have completed a consumer proposal.  

Tips to Rebuild Credit After a Consumer Proposal 

Rebuilding credit takes time and effort but we promise you it is worth it in the long haul! 

  1. Start early: Begin working on rebuilding credit as soon as the consumer proposal is completed, and in some cases you can begin during the process. Speak to your LIT with any questions you have and ask when to start rebuilding your credit.  

  1. Apply lessons from deb counselling sessions: Utilize the debt counseling received during the consumer proposal to develop better money management habits. Try to implement these behaviours in your daily routines.  

  1. Manage credit card balances: Keep credit card balances low and pay them off in full each month to demonstrate responsible credit utilization. This is important for anyone, regardless of being in a consumer proposal! 

  1. Monitor and correct credit reports: Regularly check credit reports for errors or discrepancies and contact credit reporting agencies to correct any inaccuracies. 

Credit card

Addressing Credit Report Errors 

Credit report errors can happen, and it is fundamental to identify and handle them promptly. If any errors are found, contact the credit reporting agencies to dispute and correct the information. Accurate credit reports are crucial for rebuilding credit after a consumer proposal. 

Embracing Life After a Consumer Proposal 

Completing a consumer proposal is a major step towards financial recovery. We congratulate if you have determined you are in the position to need help, and are taking the steps to reach out to someone.  By seeking help early,  individuals can regain control of their finances, rebuild credit, and work towards achieving their long-term financial goals. 

Taking Action for Debt Relief 

If you are struggling with overwhelming debt, it is essential to take action and seek professional debt relief services. Licensed Insolvency Trustees can provide guidance and help explore debt solutions tailored to your specific situation. There may be some roadblocks when it comes to qualifying for a credit card after a consumer it is important to know that you can  rebuild credit and regain access to credit over time. You do not need to struggle alone, there are resources available to help.  

The fear of the unknown often makes us freeze and avoid acting.  Now that you are armed with this knowledge, take action to get that debt behind you. Get that overwhelming and crushing debt off your back so you can thrive again.   

No matter how difficult or complicated your financial situation may seem, there are options available to help you rebuild and thrive. Our Debt Relief Specialists are available by phone at 1.855.884.9243, or you can request a call back via our contact us page. There is no need to travel to a local office. Licensed Insolvency Trustee, Bromwich+Smith, is now offering video appointments, with all services available from the comfort of your home.   


FAQ Related to Credit Card after Consumer Proposal


    1- How Does a Consumer Proposal Affect My Credit Rating? 

    Many actions impact our credit score and credit reports, such as making late payments, carrying high balances, and being the subject of collection activities. Other activities also have an impact: liens, debt management counselling, debt management programs, and bankruptcies. And, yes, consumer proposals affect your credit rating.  The key is understanding which option is best for your situation, and how to rebuild your credit after choosing  an option.   

    2- How soon can I apply for credit? 

    Life after consumer proposal can be wonderful. The great news is you can rebuild and improve your credit score after a consumer proposal and qualify for best rates and terms within 2 years from taking action.

    3- How Does a Consumer Proposal Affect My Credit Rating?

    In a consumer proposal, you can apply and be approved for some types of credit shortly after you file and while you are working through the proposal.  For example, you can apply for vehicle financing with companies that specialize in working with clients that sign into a consumer proposal.  Reputable vehicle financing companies offer newer model vehicles and competitive interest rates, and help you avoid losing money on the vehicle financing (negative equity). Life after a consumer proposal doesn’t need to be doom and gloom--it can be quite the opposite.    

    Credit report expert Richard Moxley shares that the best and fastest way to increase your credit score is with a credit card.  Keep in mind that a prepaid credit card does not build credit, and learn more about the many secured credit card options in the market now which do.   

    Once you have paid off your consumer proposal and attended your two counselling sessions, you will receive a certificate of completion.  If you were also utilizing a car loan and/or secured credit card for at least 2 years during your proposal, you will be able to qualify for a credit card with best rates and terms.  “I have a mortgage at a very competitive rate, two credit cards and my credit score is higher than it’s ever been, even before filing into my consumer proposal.” – anonymous client.   

    That is hopeful and proof that there certainly is credit life after consumer proposal. If you are thinking about a mortgage after consumer proposal, learn more here

    One of the principles of the insolvency act is rehabilitation of the individual, and by being able to rebuild credit that principle is upheld.  

    4- What are some tips to rebuild credit after a Consumer Proposal? 

    1. Do not wait until you complete your consumer proposal, start as soon as you sign in with a car loan or 2 secured credit cards. 
    1. Take the information and tips you learn in your counselling sessions and apply them to the new credit products. 
    1. Keep your balances below 50% of the limit by paying off your credit card in full, or at least make your minimum payments on or before the due date. 
    1. Monitor your credit report, check for errors, and take action immediately if you find any. 
    1. Learn how credit works and how your credit report works so you can master this -link to our webinars. 

    5- What if there are errors on my credit report after I complete my Consumer Proposal? 

    Sometimes a consumer proposal will show up as a bankruptcy on your credit report as it is supposed to.  Check your credit report regularly, at least once per year.  This can be done for free through the two Canadian credit reporting agencies: Equifax and Trans Union. You can also check your report through your bank or a third party (read all the fine print).  If you see an error, immediately deal with it by reaching out to Equifax, Trans Union or a credit report expert

    consumer proposal is an excellent alternative to bankruptcy.  It provides legal binding protection from your creditors in that, once signed, they can no longer call, send demand letters, engage in collection activities, place a lien or garnishment, or take you to court.  Your assets are protected and as you can see, your credit score is no worse off than it would be with a debt repayment program, Orderly Payment of Debt, credit counselling or collections.  The best part is, you absolutely can rebuild your credit and qualify for best rates and terms with new credit during and after your consumer proposal.   


    Taz Taz Rajan 

    Taz is a Community Engagement Partner at Bromwich+Smith and has been in the finance industry for nearly two decades and has always been passionate about education and empowerment. 
    Having declared bankruptcy herself, she intimately understands the shame, stigma surrounding matters of debt as well as the joy and relief that comes from restructuring. Taz actively works to normalize the conversation of debt through blogs, media interviews, webinars, lunch & learns and through building relationships.


    Related blog:  

    Consumer Proposal: Alternative to Bankruptcy| Bromwich+Smith ( Can Get a Mortgage After a Consumer Proposal? ( 
    Buying a Car during a Consumer Proposal | Bromwich+Smith ( 
    How many times can you file a consumer proposal? ( 
    Consumer Proposal - Can it Help Avoid Bankruptcy? ( 
    How does Credit work in Canada? |Bromwich+Smith ( 
    Tips to Improve Your Credit Score Fast | Bromwich+Smith ( 


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