How Long Does a Consumer Proposal Stay on a Credit Report?

Understanding the Impact of a Consumer Proposal on Credit Report

A consumer proposal is a course of action that many individuals undertake when they are unable to fully repay their debts. It is a legally binding agreement made between a debtor and their creditors, administered by a Licensed Insolvency Trustee (LIT) as per the Bankruptcy and Insolvency Act of Canada. However, it is crucial to understand the question, “How long does a consumer proposal stay on a credit report?”

What is a Consumer Proposal?

A consumer proposal is essentially an agreement that allows a debtor to pay a reduced amount of the debts they owe over a period of five years. It’s an effective solution for individuals who are struggling with overwhelming debt.

Legal Framework of a Consumer Proposal

Administered as per the Canadian Bankruptcy and Insolvency Act, a consumer proposal is legally binding. Thus, it requires oversight by a Licensed Insolvency Trustee.

The Impact of a Consumer Proposal on Credit Rating

The implementation of a consumer proposal does affect your credit rating. It stays on your credit reports from Equifax and TransUnion for a period of three years after you have completed the payments or six years from the date the proposal was filed, depending on whichever occurs first.

Defining Credit Rating

Credit rating, in essence, is an evaluation of how effectively an individual has fulfilled their financial obligations. It is dependent on their current debt status and payment history.

One of the significant credit bureaus in Canada, Equifax, assigns credit scores on a scale from R1 to R9. An R1 rating indicates that the individual has been punctual with their payments, whereas an R9 rating suggests that the person has declared bankruptcy. When you file a consumer proposal, your credit rating shifts to R7, which signifies that the remaining debts need to be paid off after the completion of debt consolidation.

Duration of a Consumer Proposal on a Credit Report

The credit bureaus Equifax and TransUnion have specified that a consumer proposal can be removed from a person’s credit score only three years after the last payment is made. Therefore, the quicker you pay off the consumer proposal, the sooner you can start rebuilding your credit report.

Positive and Negative Information on Credit Report

The credit report maintains data about timely payments and delayed ones for a definite period. This period varies based on the financial information, the location of the individual, and the credit bureau that generates the report.

Positive information, such as loan type, loan period, and initial loan amount, is indefinitely maintained from the time the report is created, contributing to an improved credit score.

On the other hand, negative information, like missed debt payments, involvement of collection agencies, and previous bankruptcies, generally stay in credit reports for six years, thereby lowering the credit score.

Judgements and Credit Report

Debts owed through a court, also known as judgments, can appear due to lawsuits. If you lose a lawsuit and owe debt, it can show up in your credit report. This information generally stays in your credit report for six years, with some provincial exceptions.

Deciding if a Consumer Proposal is Suitable for You

A Licensed Insolvency Trustee can provide guidance in determining if a consumer proposal aligns with your unique financial situation.

Advantages of a Consumer Proposal

A consumer proposal brings several benefits:


  • It allows you to settle debts as per your affordability, not as per the demands of the creditors.
  • It halts all actions by creditors, including wage garnishments and collection calls.
  • It legally binds even reluctant creditors to agree to settlements.
  • It immediately stops all interest charges.
  • It allows monthly payments for a period of five years.
  • It does not involve your assets or possessions.


There are no additional fee payments as the tariff is as per government regulations.

In conclusion, while a consumer proposal can be an effective tool to manage debt, it is crucial to understand its impact on your credit report. Seeking advice from a Licensed Insolvency Trustee can help you make an informed decision.

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