Can I get a loan after a Consumer Proposal?

Can I get a loan after a Consumer Proposal

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By Bromwich+Smith Staff | 633 words | Reading Time: 3 minutes and 9 seconds| Date: 2023/01/13

A Consumer Proposal is intended to relieve your overwhelming debt. It allows you to pay off only a portion of debt, spread over a course of time with payments up to five years. Throughout that time, we understand that life changes, and you may find yourself in a situation where you are needing to qualify for a loan. Is it possible during a consumer proposal?

Let’s start with your credit score. As you likely know, with any loan that you apply for your creditors will perform a credit check. All debt relief programs will show up on your credit score and may impact your ability to get any loan during the program- though not impossible. A Consumer Proposal will stay on your credit for three years after your last payment OR six years from the initial file date whichever comes first. So, the quicker you are able to pay off your debt the sooner you can start to rebuild your credit

How can I get a loan after a Consumer Proposal?

If you are looking for a loan during your Consumer proposal, you may be asked to share how your proposal has made you responsible for your finances- essentially proof that you will not be in the same situation that led you to filing originally.

Many lenders may have restrictions on how much you can borrow or have higher interest rates to counter if you are unable to pay. You may be thinking about going for a quick loan from a pay day lender, or other less strict borrower. We highly suggest avoiding going this route, as it can make your financial situation turn for the worse very quickly. Any lender who appears to be making this process easier than you imagined may not have your best interest in mind. The lower your credit score, the higher the interest on your loan. This means you will end up paying the lender much more than the loan is worth.

What can I expect during the process?

  • Your credit score and financial situation will be under review.
  • You will need to share proof of employment, which may require a letter of employment on top of current pay stubs.
  • Your lender may ask to speak to your Licensed Insolvency Trustee. This will help them better understand if you are capable of paying the loan back, or if it will put you into more financial distress and potentially in a place where you are unable to pay your current consumer proposal payments. Your LIT will want to be involved to ensure that the loan is in your best interest.

As you can see, there are extra steps if you are looking for a loan during a consumer proposal, but it is not impossible. Before you start the process, we suggest reaching out to your Licensed Insolvency Trustee to start the conversation.

Can I qualify for a car loan?
Just like with other lenders, car loans are not impossible during your consumer proposal, however you will find yourself needing to go through extra steps. This includes, the likeliness of higher interest rates. There are many companies that make promise of guaranteed loans, but the dangers of higher payments could put you in a place where you are struggling to make payments. Be aware of all the costs before signing with any lender.

Bromwich+Smith works with partners across Canada who have been able to help our clients in many different situations. Visit our Partner Page to learn more, or ask us who we recommend.

If you are facing overwhelming debt, remember that you are not alone. Bromwich+Smith has a number of debt relief strategies to help you regain control of your finances and get your life back on track. Reach out today for a free, confidential, no obligation consultation. Bromwich+Smith’s Debt Relief Specialists are available by phone at 1.855.884.9243, or request a call back at contact us page. 

More Resources:

Can Get a Mortgage After a Consumer Proposal?

How Long Does a Consumer Proposal Stay on a Credit Report 

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