How Long Does a Consumer Proposal Stay on a Credit Report

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Let us first understand what exactly a consumer proposal is. It is an agreement that is legally binding and is made between a person and his creditors for paying reduced amounts of debts that a person owes, all within a period of five years. Because this consumer proposal is legally binding, it requires that it be administered according to the rules that govern the Canadian Bankruptcy and Insolvency Act, by a Licensed Insolvency Trustee. 

While a consumer proposal makes for an excellent solution that conquers debt, it will, however, have an impact on your credit rating. For a period of three years after you have paid the debt or six years from the date the proposal has been filed, it will remain on your credit reports (Equifax and TransUnion), depending on which comes first. 

Credit Rating Defined

This rating estimates how adequately a person has met his or her financial commitments and is based on current debt status and payment history.

One of the largest credit bureaus in Canada, Equifax, gives credit scores that scale between R1 and R9. A rating of R1 indicates that the person has always made payments when they are due, whereas an R9 rating would indicate that the person has been declared bankrupt. R1 rating is an indication that payments have always been made within 30 days of receiving bills and that not more than one payment has been delayed. R9 rating considers the person a bad debt and that its collection has been left to a collection agency, and also is an indication of bankruptcy. 

Filing a consumer proposal leads to a rating of R7 and is an indication of debts that have to be paid after a debt consolidation ends. This rating is also applicable if a person has made a deposit in court, voluntarily, or made any other arrangements like a consumer proposal. 

Period For Which a Consumer Proposal Will Stay On a Credit Report  

Both Equifax and TransUnion determine that a proposal can be taken off a person’s credit score only three years after the last payment is made. So, the faster a consumer proposal is paid off, the credit report gets built up. It maintains information on payments made in time and those that were not made in time and maintains this information for a definite period of time.

This time will vary depending on:

  • The financial information
  • Where you live
  • The credit bureau that creates the report

Positive Information

Credit bureaus also maintain positive information, indefinitely, from the time that a report has been created.

   Information included:

  • Loan type
  • Loan period 
  • Loan amount initially
  • Repayment Score

This positive information, if kept in a person’s credit score, can lead to an improvement in credit score.

Negative Information

Negative information will stay in credit reports, generally, for 6 years. However, this information can also remain for shorter or longer periods of time. 

Negative information includes:

  • Missed debt payments
  • Where a collection agency has been sent to accounts
  • Any previous bankruptcies

All this negative information can lower your credit score.


Debts owed through a court are called judgments and can be due to lawsuits. If you have sued somebody and lost the case, then any resulting debt can show up in a credit report.

This information will remain in your credit report for six years.

In the following provinces, TransUnion will keep this information on file for seven years 

  • New Brunswick
  • Ontario
  • Newfoundland and Labrador
  • Quebec

In Prince Edward Island, this information will be maintained by TransUnion for ten years.

Is a Consumer Proposal the Right Thing to Go

You can get help from a Licensed Insolvency Trustee to decide if a consumer proposal fits your particular financial situation. Look at the benefits that such a proposal can bring.    

Benefits of a Consumer Proposal

  • It settles debts as per what a person can afford and not what is demanded by creditors
  • Halts all actions by creditors including those by wage garnishers or calls by collection agencies
  • Creditors, even if they are reluctant, are legally bound to agree to settlements
  • All interest charges are halted immediately
  • Payments are made monthly for a period of five years
  • There is no involvement of assets or other things that are possessed by the person
  • No additional fee payments, as tariff is as per government rules 

Call Remolino & Associates at (416) 792-5599 or book an appointment for a free consultation that is compassionate and personalized.

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