How long does a consumer proposal stay on your credit report?

Posted on 15 September 2022

Written by Alan Spergel

A consumer proposal is an increasingly popular form of debt relief in Canada, and a great alternative to bankruptcy. A legal form of debt settlement, a consumer proposal is a form of renegotiation of your debt with your creditors that can reduce your debt by up to 80%. Filed on your behalf by a Licensed Insolvency Trustee, consumer proposals mean you can make manageable monthly payments for a maximum of five years. Consumer proposals have various advantages including the ability to keep your assets, and offer full protection from your creditors and collection agencies via a stay of proceedings. Despite their advantages, before filing a consumer proposal, you should consider the consequences on your credit report before filing. So, how long does a consumer proposal stay on your credit report? In this article, we explain all you need to know about the impact of a consumer proposal on your credit report.

What is a credit score?

A credit score is a measure of how well an individual meets their financial commitments. This is based on their payment history, and the status of their debts. In Canada, there are two primary credit bureaus – Equifax and TransUnion. Both of these credit bureaus measure your credit score based on your financial activity. For instance, Equifax measures your credit score on a scale of R1 to R9. A R1 rating means that you make your payments on time, and you have missed no payments. R9, at the other end of the scale, means you have declared bankruptcy. A R9 is a ‘bad debt‘, a debt that has gone to a collection agency or resulted in a bankruptcy. If you have filed a consumer proposal, you will be given an R7 rating. A credit bureau will keep positive and negative information on your credit report – this includes payments that you have and have not made. This information is stored on your credit report for a period of time. This time depends on your province, the credit bureau, and the type of financial information being held.

How long does a consumer proposal stay on your credit report?

A consumer proposal is an excellent solution to clearing debts for many Canadians, although it does impact your credit score. Consumer proposals are removed from your Equifax or TransUnion credit report three years after you pay off all the debts included in the consumer proposal, or six years from the date it was filed – whichever comes first. This means that the faster you fulfil the expectations of the consumer proposal and pay it off, the quicker you can begin to rebuild your credit score. While this may seem like a long time, the situation is much longer if you file a bankruptcy. Equifax and TransUnion will remove a bankruptcy from your credit report six years after the date you are discharged, or seven years in some provinces. If you file a consecutive bankruptcy, it will take fourteen years to have this removed from your credit report.

Is a consumer proposal right for me?

If you are thinking about filing a consumer proposal, it may be right for you if you are looking to begin a fresh financial future while keeping your assets. In fact, 70% of Canadians choose a consumer proposal over bankruptcy as their preferred debt relief solution. Here are some of the key advantages of filing a consumer proposal over other forms of debt relief:

  • Your unsecured debts are reduced by up to 80%
  • You can keep your assets
  • You can avoid the costs involved in surplus income, unlike in bankruptcy
  • Your payments are fixed and reduced to monthly payments that you can determine
  • You avoid any interest, and penalties are frozen
  • You receive full protection from your creditors and collection agencies
  • In just five years, you can be completely debt free
  • You can avoid the consequences of filing bankruptcy
  • Your credit score takes less time to recover than with a bankruptcy
  • You can learn more about budgeting in your credit counselling sessions
  • No additional fee payments for a Licensed Insolvency Trustee

At Spergel, we will help you to decide whether or not a consumer proposal is the right form of debt relief for you. Our experienced Licensed Insolvency Trustees can also help you to rebuild your credit score when filing a consumer proposal. We have been helping Canadians with their consumer proposals for over thirty years, and we are here to help you too. Book a free consultation today – you owe it to yourself.

Alan Spergel

Alan Spergel

Alan Spergel is the founder and President of Spergel. A leader in our industry, he is also a former chair of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) and has served on Canada's Superintendent of Bankruptcy Management Board. He actively supports multiple charities, ensuring that Spergel gives back to our communities and has recently been appointed as Chairman of the Board of the Humber River Hospital Foundation. Outside of the boardroom, you can find Alan playing golf, tennis, or skiing and enjoying quality time with his grandchildren.

Schedule a Free Consultation with Alan Spergel (or your local Spergel LIT) by:

Phone 1-877-501-4321 (toll-free)

24/7 live chat (with a human) on our website

Facebook messenger

Email (hello@spergel.ca)

Online booking calendar

Be Debt Free. You Owe It to Yourself.

You may be interested in:

Helpful starting information:

What to Bring to an Appointment

To get the debt help that you need, please bring a list of who you owe and how much to each, a list of everything you own and your monthly household budget. Don’t have everything right away? Don’t worry – We will guide you through each step.

Download Form

Your Information

We’ll walk you through our application process. But, if you want to prepare for your debt free assessment consultation in advance, download our information form and fill in what you can.

Download Form

Calculate Your Debt Repayment Options

How can you compare your debt repayment options if you don’t know how much they will cost you? Your solution will become much clearer when you are able to compare costs.

Debt Calculator

Ready to Be Debt-Free?

If you’re ready to be debt free, it’s time to meet with one of our knowledgeable Licensed Insolvency Trustees at your convenience and get started

Meet with a trustee