How Long Does A Consumer Proposal Stay On Your Credit File?

Jun 23, 2022 | Consumer Proposal

Written by C. Buhler & Associates Ltd.

Written by C. Buhler & Associates Ltd.

Both your credit score and credit report have a major impact on almost all of the financial decisions you can make. When you file a consumer proposal, it will affect your credit and stay on your credit report for a set period of time from the date you filed, or from when you made your final payment. Canada’s credit bureaus update your credit report periodically, and any negative information can affect your life moving forward. This might lead you to wonder about consumer proposals and if they’re the right financial choice for you. 

We’ll be going over the key information you need to know about consumer proposals and what they can do for your financial situation:

Consumer Proposal Information 

The Length that a Consumer Proposal will show on your report

According to an Equifax credit report, a consumer proposal can stay on your credit report for 6 years. However, if you were to pay your consumer proposal faster, you can decrease that amount of time. If you complete the consumer proposal in five years, it will be removed one year later. If you complete it in two years, it will be removed in five years. If you pay off the consumer proposal with a lump sum, then it will be removed from your credit report three years after your final payment, but it will never report on your credit for longer than six years after filing. 

How To Qualify for a Consumer Proposal

To qualify for a consumer proposal, you must be insolvent. There are many tests that can be applied to determine if you qualify as insolvent, and eligible for a proposal: 

  • You must be unable to pay your debt.
  • You must have a total debt amount that is no less than $1,000 and no more than $250,000. (this does not include the mortgage on your home)
  • You must have a stable source of income to ensure that you can make payments.
  • You must have no prior proposal proceedings open.

A Licensed Insolvency Trustee will craft the consumer proposal with you. During the proposal process, you and your trustee will make an offer to pay your creditors a percentage of what’s owed to them. The percentage can vary depending on how much debt you owe, and the value of your assets. 

Once a percentage is accepted, you’ll be responsible for making monthly payments through the Licensed Insolvency Trustee, who will then distribute the amount to your creditors. A consumer proposal can also freeze your interest, allowing you to focus on your monthly payments without the stress of high interest.

The payments you are required to make during your Consumer Proposal also include any Trustee fees. The Trustee’s fees are determined by the federal government, and set on a tariff basis, which means that a certain percentage of your monthly payments go toward trustee’s fees, and all Trustees are paid the same proportion.

Pros & Cons 

There are many advantages to be had with a consumer proposal over bankruptcy:


  • The biggest advantage is that you can keep your assets. This includes your home, car, and/or investments. 
  • Depending on the terms of the agreement you make with your creditors, you’ll repay only a portion of the debt owed. In some cases, debt can be reduced by more than 70%.
  • You can get out of debt by paying less than the full amount that you owe, and it may be faster than continuing payments on your own or seeking other debt-relief options, such as debt consolidation.
  • Filing a consumer proposal grants you protection from debt collectors. Once the proposal is approved, you will stop receiving collection calls, and any wage garnishments for debts included in the proposal will have to cease.
  • You won’t have to deal with calculating surplus income as you would if you chose to file for bankruptcy. Once you have a fixed amount that you need to repay, the number won’t increase.
  • Your interest will be frozen at the time the proposal is filed.


  • It will take up to 5 years to pay off (although most proposals allow for pre-payment options).
  • Your credit rating will show up as an R9 on your credit report while you are making payments on the proposal, and an R7 once your payments are complete, for no longer than 6 years in total. This can make it difficult for you to take out a car loan or rent/buy properties.
  • The proposal will become part of the public record.
  • The proposal is legally binding, and you won’t receive a refund on the fees paid if you break it.
  • The Canada Revenue Agency (CRA) can keep any tax credits or refunds that you would have received during the year you filed the proposal. 

Dealing with financial struggles can be hard to go through alone. You need to decide the best course of action in finding a debt relief option. We understand how challenging it can be to find the proper solution. As a Licensed Insolvency Trustee in Winnipeg, we can help you craft a consumer proposal that fits your unique financial situation. Make an appointment for a free consultation today and work toward being debt-free.

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