Question: I previously filed a consumer proposal to deal with credit card debt and a line of credit. I have been paying 400/mth for the last 3 years and have another 2 years to go. Whenever I have applied for credit to rebuild my credit, I’m told that I claimed bankruptcy so no one will touch me. I thought the point of the proposal was that it would protect me from the title “bankrupt”. I have taken a secure credit card to start rebuilding my credit however, nothing seems to change on my credit profile and I still cannot get a department store credit card.
I am wondering if a bank would consider me for a loan to pay out the balance of the proposal so that I could have it off my credit report in 3 years from the time I pay it out. The trustee company did not tell me it would be 3 years after before it clears from the credit report. I was told after my 5 year payment completed, it would be cleared from the report.
2) I would like to do this so that I could start rebuilding my credit.
Credit Repair, Consumer Proposal and Loan
Your question raises a number of issues.
According to Equifax, a consumer proposal remains on your credit report for three years after you complete the proposal. Your trustee should have made this clear to you.
In most cases it is very difficult to borrow money from a bank while you are in the middle of a consumer proposal, because until the proposal is completed, your debts are not officially discharged. It may however be possible to get a loan:
- if you have a co-signer, or
- if you have something to offer as security for the loan, such as a car or a house. If that is the case, read our article about applying for a mortgage during a consumer proposal.
In most cases the best strategy is to make a personal budget, and reduce your personal expenses as low as possible, so that you can pay off the consumer proposal as quickly as possible. Once the proposal is paid off, continue saving money so that you can prove to lenders that you are credit-worthy. Your trustee should be able to provide you with more information on rebuilding your credit or read our many articles about credit repair.