Consumer Proposal – Effects on Credit


After filing a consumer proposal, both credit bureaus in Canada will disclose your proposal in a footnote at the end of your credit report.  This footnote remains in your credit report for 3 years after you make your last proposal payment.

R7 Credit Rating

Debts that you settle through a consumer proposal are coded R7.  This means that they have been settled through a payment arrangement.  Debt management plans result in your debts being coded in the same way.  Debts in good standing are coded R1, while debts discharged through bankruptcy are coded R9.  Many view a consumer proposal as less damaging to their credit because an R7 rating is viewed more favorably than an R9.

How Important Is Your Credit?

If you can’t repay your debt on your own, then we suggest that preserving your credit is less important than solving your debt problem.  In other words, where would you rather be in 5 years: Debt free with bad credit after filing a consumer proposal, or struggling with debt and the same credit rating that you have today?  Keep in mind that your credit may already be damaged at this time.

We’d never suggest that having a high credit score isn’t ideal, but we’re sure that the individuals that we assist are better off with bad credit and no debt, as opposed to their same credit score, and all of the financial stress and struggle associated with maintaining their debt.

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