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How Long Does a Consumer Proposal Stay on Your Credit Report
- Senga Bailey
- Jan 12
- 6 min read
If you are struggling with unsecured debt, a consumer proposal can feel like a lifeline. It offers legal protection from creditors, stops interest, and allows you to repay a portion of what you owe at an affordable monthly amount. However, one of the most common and reasonable concerns people have before filing is: how long does a consumer proposal stay on your credit report?
Understanding how a consumer proposal affects your credit is essential before making a decision. In this article, we discuss the timelines, what it means for your credit score, and how you can begin rebuilding financially.
What is a Consumer Proposal?
A consumer proposal is a legally binding agreement between you and your creditors, administered through a Licensed Insolvency Trustee (LIT). Only a federally licensed Insolvency Trustee is legally authorized to file and administer a consumer proposal in Canada. It allows you to:
Reduce the total amount of unsecured debt you must repay
Freeze all interest
Stop collection calls, wage garnishments, and legal action
Repay your debt through a single monthly payment, often over up to five years
Consumer proposals are commonly used by individuals with unsecured debt (credit cards, lines of credit, payday loans, personal loans) who want to avoid bankruptcy but cannot afford full repayment.
According to the Office of the Superintendent of Bankruptcy, consumer proposals now outnumber personal bankruptcies in Canada, reflecting how popular this option has become for people seeking a structured escape from debt.
How Long Does a Consumer Proposal Stay on Your Credit Report?
In Alberta, a consumer proposal stays on your credit report for:
The later of:
Three years after you complete the consumer proposal, or
Six years from the date you originally filed the proposal
This timing is governed by Canada’s major credit bureaus, Equifax and TransUnion, and applies nationwide, including Alberta.
Example Timeline:
If you file a consumer proposal in 2025 and complete it in 2029:
It would be removed in 2032 (three years after completion)
If you complete it early in 2027:
It would be removed in 2031 (six years from filing)
The removal date always follows whichever of the two rules results in the later date.
How Does a Consumer Proposal Affect Your Credit Score?
Credit Rating During a Proposal
While you are in an active consumer proposal, your credit file will show an R7 credit rating. This rating indicates you are repaying debt through special arrangements rather than standard terms.
An R7 is lower than a standard good credit rating (R1–R2), but it is still considered significantly better than bankruptcy, which carries an R9 rating.
Initial Score Drop
Most people experience a drop in their credit score shortly after filing, often because:
Accounts are reported as included in insolvency
Late payments and collection activity are already present
However, many clients are surprised to learn that their score can stabilize — and sometimes improve - during the proposal because:
Debt is reduced
Payments become consistent
Collections stop immediately
According to Equifax Canada, payment history accounts for approximately 35% of your total credit score, which makes consistent proposal payments critical for recovery.
Will Lenders See My Consumer Proposal After It’s Removed?
Once a consumer proposal is officially removed from your credit report after the credit bureau’s retention period has ended, it will no longer appear on your file. At that point, future lenders will not see the proposal itself, and only your rebuilt positive credit history will remain visible. However, it’s important to note that some major financial decisions, such as mortgage underwriting, may still involve questions about whether you have ever filed an insolvency, depending on the lender’s internal policies and application requirements.
Can You Rebuild Credit While in a Consumer Proposal?
Absolutely, and this is one of the most essential parts of the financial recovery process.
Rebuilding Opportunities During a Proposal
Even while your proposal is active, you can begin rebuilding by:
Using a secured credit card
Making all proposal payments on time
Avoiding missed utility, rent, or phone payments
Many trustees also provide guidance on safe credit-rebuilding strategies during this period.
Several clients begin seeing improvement within 12–18 months when they demonstrate consistent positive behaviour.
After the Consumer Proposal Is Completed
Once completed:
You become eligible for traditional unsecured credit more easily
Auto financing generally becomes accessible within 6–12 months
Mortgage eligibility may return within 2–3 years, depending on income and stability
According to TransUnion, rebuilding credit after financial difficulty is a gradual process that depends on consistent, positive behaviours such as making on-time payments and using credit responsibly.
As these actions are reflected on a consumer’s credit report, credit scores can improve over time, with progress becoming more noticeable as healthy financial habits are maintained.
Does a Consumer Proposal Affect All Debts the Same Way on Your Credit Report?
Debts included in a consumer proposal are reported on your credit file as “included in insolvency” and typically carry an R7 rating until they are removed. However, not all debts are treated the same. Secured debts, such as car loans or mortgages, are not included in the proposal and will continue to be reported normally, provided you remain in good standing with those payments. Student loans may also be subject to specific eligibility requirements depending on factors such as the age of the loan and your status.
This distinction can allow some individuals to preserve essential assets while restructuring their unsecured debt in a more manageable way.
Is a Consumer Proposal Better for Your Credit Than Bankruptcy?
From a credit-reporting perspective, the differences are significant:
Option | Credit Rating | How Long It Stays |
|---|---|---|
Consumer Proposal | R7 | 3 years after completion or 6 years from filing |
Bankruptcy (First) | R9 | 6–7 years after discharge |
A consumer proposal demonstrates a structured effort to repay debt and can provide lenders with greater confidence once the proposal has been successfully completed. In many cases, it also allows for a faster path to credit recovery compared to other insolvency options. For these reasons, a consumer proposal is often the first option considered by Canadians who qualify for this form of debt relief.
Also Read:
Common Concerns Clients Have Before Filing a Consumer Proposal
Many people hesitate because they worry about:
Whether they will ever qualify for credit again
How will it affect their future mortgage plans
Whether employers can see their credit file
Whether the program is affordable
The reality is that a structured insolvency solution often improves financial stability faster than remaining stuck in high-interest debt.
At SCB Debt Solutions, we guide our clients through:
Budget review and planning
Honest comparison of proposal vs. bankruptcy
Long-term rebuilding expectations
How SCB Debt Solutions Supports You Through the Process
SCB Debt Solutions helps Albertans:
Understand all available options before filing
Determine if a consumer proposal is truly the best solution
Stay compliant throughout the repayment period
Plan for long-term financial recovery, not just immediate relief
Considering a Consumer Proposal in Alberta?
If you are struggling with unsecured debt and are unsure whether a consumer proposal is right for you, speaking with a Licensed Insolvency Trustee early can prevent your situation from compounding.
SCB Debt Solutions offers free, confidential consultations to help you understand how a proposal would affect your credit, compare all available options, and choose the path that best fits your financial future.
Ready to take control of your debt? Speak with our Licensed Insolvency Trustee at SCB Debt Solutions today, and get clear, confidential guidance on whether a consumer proposal is the right step for you.
FAQs on Impact of Consumer Proposal on Credit Score
1) Will my spouse's credit be affected by my consumer proposal?
No, your spouse's credit remains separate unless they co-signed debts included in your proposal. Joint debts may impact their credit, but your proposal itself won't affect their individual score.
2) Does checking my own credit report during a proposal hurt my score?
No, checking your own credit is a "soft inquiry" that doesn't affect your score. Regular monitoring is actually recommended to track progress and ensure all information is reported accurately.
3) Can I get a credit card while my consumer proposal is still active?
Yes, secured credit cards are available during an active proposal. You provide a deposit as collateral, which becomes your credit limit, helping rebuild your credit history immediately.
