No matter what stage of making a Consumer Proposal you may be at (even if you’re still considering one), you probably have questions about what to expect after your Consumer Proposal is finished. Below we’ve outlined some important information about what happens when a Consumer Proposal ends and some tips for future success once your Consumer Proposal is complete:
Consumer Proposal Completion
Once you have completed the terms offered to your creditors under your Consumer Proposal you will receive a Certificate of Full Performance, which officially releases you from your obligation to repay the remaining balance of your debts settled in your Consumer Proposal.
Your Licensed Insolvency Trustee (sometimes referred to as a proposal administrator) will also receive a discharge from the Consumer Proposal process once their legal requirements are fulfilled. These include:
- Reviewing and admitting creditor claims
- Compiling a final accounting of all moneys received in the Consumer Proposal
- This “final accounting” is called a Statement of Receipts and Disbursements
- Distributing the final payments (called dividends) to eligible creditors
Consumer Proposal Documents to Keep
A Consumer Proposal is a legal debt settlement, so there will be several documents sent to you throughout the process. It is a good idea to keep these documents for your records, including your:
Notice of Consumer Proposal: This is the first set of forms you will receive as part of your Consumer Proposal. In these documents you will see the official start date of your Consumer Proposal, the actual settlement offer you proposed to your creditors, and a list of your creditors.
Certificate of Full Performance: Starting your Consumer Proposal means your creditors can no longer ask you to make payments to them, since those debts will be settled through the proposal. Receiving your Certificate of Full Performance (completion) shows that you are officially free from the balance that was forgiven under the proposal settlement. In other words, your Full Performance Certificate is proof that you’ve achieved a financial fresh start!
Final Statement of Receipts and Disbursements: This is the final document you will receive in the Consumer Proposal process. It will contain key dates and a finalized list of the creditors that were dealt with through the Consumer Proposal, and show how much money each received.
If you change your mailing or email address before you receive your Final Statement of Receipts and Disbursements be sure to let your Licensed Insolvency Trustee know.
What if I lose my Consumer Proposal documents?
If you have misplaced your Consumer Proposal documents there are a few ways you can get copies for your records:
- Contact your Trustee directly
- Contact the Office of the Superintendent of Bankruptcy
Credit History and Score after a Consumer Proposal
A Consumer Proposal will be reflected on your credit history report for 3 years after the date you finish your Consumer Proposal, or 6 years from the date your Consumer Proposal started (whichever is soonest). There is no need to wait for this period to pass before you start improving your credit history and score – as soon as your Consumer Proposal is completed, you can start improving your credit report.
Taking these credit rebuilding steps is crucial in order to build your credit score, and ultimately get new credit after your Consumer Proposal:
- Get copies of your credit reports from both Equifax and TransUnion of Canada and check them for errors
- If you find inaccuracies or errors take the time to get them fixed (read more on how to do that below)
- Pay ALL your bills on time, every time
- Even small bills like cellphones count
- Get new credit and use it well
- Obtaining a secured credit card is a good place to start. Lenders such as Home Trust, Capital One, and several other banks in Canada offer secured credit cards that report credit information to credit bureaus.
Information about completed Consumer Proposals is sent from the Office of the Superintendent of Bankruptcy to the credit bureaus each week, this is how your credit history should be updated through the Consumer Proposal process. Unfortunately it is common to find errors on your credit history after your Consumer Proposal is finished. A common error is finding that one of your creditors is continuing to report a balance owing, even though it was dealt with under the Consumer Proposal.
How can I fix mistakes on my credit reports?
It can feel very frustrating to find errors or inaccuracies in your credit history reports when you’re ready to move on with your debt-free life. The good news is that you can take control of the situation and get them fixed!
- If you find errors, you can fill out the Credit Investigation Request Form here to request corrections from Equifax and TransUnion.
- You will need to fill out the form, attach relevant documents if possible and mail the form to the address at the top of the report where you found the error.
Because Licensed Insolvency Trustee are not lenders, we unfortunately cannot update or access your credit records.
Getting Credit After a Consumer Proposal
While it is possible to get new credit immediately after (and even during) your Consumer Proposal, be sure that you are satisfied with the terms of borrowing. It may take some time before you qualify for “best rates”. If this happens, consider if the credit is something you really need, or if you can wait until it will cost less to borrow.
How long after a Consumer Proposal can I get a…
Mortgage: Standard lenders may grant you a new mortgage if it has been two years since you finished your Consumer Proposal; less if you are working with a subprime mortgage lender.
Mortgage renewals while your Consumer Proposal is ongoing are generally approved, as long as your mortgage account and payments are in good standing.
Car Loan: Mainstream lenders may be able to grant you a vehicle loan or lease within a year or two of finishing your Consumer Proposal. Specialized lenders also exist who will extend vehicle financing during a Consumer Proposal.
Credit Card: Many people to obtain a secured credit card before their Consumer Proposal is finished. Mainstream credit cards at best rates may be available within one year of your Consumer Proposal being completed.
In addition to your credit score, lenders will also evaluate your income and savings when considering your credit application!
If you’re considering a Consumer Proposal but worry it will stop you from getting new credit, remember that if your credit balances are high or your budget stretched to cover your current debts, most lenders won’t approve you even if your credit score is high. A Consumer Proposal may actually be a vital step forward to enable you to get future credit and at best available rates.
Get a plan to become debt-free. Learn more about Consumer Proposals and other debt solutions – book your confidential free debt consultation today.