Canada's Trusted Bad Credit Car Loan Resource

Get started in 3 minutes with good, bad, or no credit.

What You Need to Know about Consumer Proposals


Are you in severe financial trouble with no clear way out? If so, a consumer proposal may be right for you if your total debts do not exceed $250,000. This legally binding process gives you an opportunity to be released from your debts after you meet the conditions that are set forth in an agreement with your creditors. While this can be a long and expensive course of action, it has the potential to improve your situation when completed.

Licensed Insolvency Trustees

One of the first steps of a consumer proposal is to find a Licensed Insolvency Trustee (LIT). An LIT will meet with you to determine if a consumer proposal is the right choice for you personally, and will then create a written offer to creditors for you to pay off a certain percentage of what is owed.  Additionally, the LIT will file and submit your finished proposal to the Office of the Superintendent of Bankruptcy (OSB) and your creditors. If approved, the LIT will use a portion of the money they collect from you to pay each of your creditors.

Conditions of a Consumer Proposal

Creditors can either accept or deny your consumer proposal when it is received. To reach this decision, creditors often hold a meeting where a vote is held. If your consumer proposal is accepted, you must:

Consumer Proposals

  • Attend two financial counseling sessions
  • Pay a lump sum or make periodic payments to your LIT
  • Adhere to all conditions set forth in the LIT proposal
  • If you meet all of these conditions and make every payment on-time and in full, you will be released from the debts that were included in your proposal. However, the proposal will be deemed annulled if you fail to meet the conditions. Your creditors will then have the opportunity to take action and collect the full amount that is owed.

    Your Credit Score

    If you submit a consumer proposal, you are generally assigned a low rated R7 credit score. The consumer proposal will be placed on your credit report for its duration, with the potential of it remaining on the report for three additional years depending on which province you live in.  If you complete the terms of your consumer proposal, you will receive a certificate that you can send to all major credit reporting agencies as proof.

    The Cost

    While consumer proposals can prove to be beneficial, they can be very costly. LITs often require you to pay to file your consumer proposal, which can cost approximately $1,500. Additionally, LITs typically will keep a percentage of the money that you pay to your creditors as a fee for administering your proposal. While a consumer proposal may reduce what you owe to creditors, it still has the potential to cost you a significant amount of money.

    Purchasing a Car with Bad Credit

    Even if your credit score has been affected by a consumer proposal, you may still be able to purchase a vehicle with assistance from our team at Canada Auto Loan. We will match you with a dealership that will give you the best shot at ultimately driving away in a vehicle. Fill out our application or give us a call at (855) 397-9445 to see what we can do for you.