Can I Apply For Credit While In A Consumer Proposal?

Applying For Credit While In A Consumer Proposal: Is It Possible?

In the financial world, it’s common for individuals to find themselves overwhelmed by debt. A common solution that many people resort to is a consumer proposal. One question that often arises in such scenarios is, “Can I apply for credit while in a consumer proposal?” This article delves into this topic, providing detailed insights to help you better understand the possibilities and limitations.

The Short Answer

Yes, it is possible to apply for credit while in a consumer proposal. However, the odds of approval are generally low unless the credit is backed up by a prepaid balance. This is because the purpose of a consumer proposal program is to assist individuals in managing their overwhelming debt, not to accumulate more.

A Deeper Look

A consumer proposal is designed to help individuals navigate their way out of crippling debt. During this period, it’s generally advised to avoid applying for additional credit, especially if you’re still getting a grip on budgeting and understanding how money and credit operate. However, there are certain circumstances where credit might be necessary.

Consider a situation where a person owes $45,000 on a car loan but the car’s market value is only $20,000. This is known as negative equity. The debtor may opt to have the vehicle seized and stop making payments on it. They might then borrow funds to purchase a cheaper, more affordable vehicle. Any loss from the sale of the seized vehicle can be incorporated into the consumer proposal.

The Role Of The Licensed Insolvency Trustee

When you file a consumer proposal, you will typically need to surrender your credit cards to your Licensed Insolvency Trustee. This means you won’t be able to apply for a new credit card while you’re making payments on your proposal–unless it’s a prepaid or secured credit card.

Legal Obligations

It’s important to note that if you apply for more than $1,000.00 in credit while in a consumer proposal, you are legally required to disclose that you are in a proposal.

The Need for Credit

There are situations where having access to credit is essential. For instance, you might need a credit card to rent a vehicle or make online purchases. Many debit cards now offer these services as well.

The Bigger Picture

While it is possible to apply for credit while in a consumer proposal, it’s generally recommended to avoid doing so. This is because the primary aim of a consumer proposal is to help individuals manage their overwhelming debt, not to accumulate more.

Further Information

For more information on consumer proposals, consider visiting the following page – Questions About Consumer Proposals.


In conclusion, while it is possible to apply for credit while in a consumer proposal, it’s generally not recommended unless absolutely necessary. The main goal of such a proposal is to help you manage your existing debt, not to accrue more

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