A consumer proposal is usually lighter on your credit than bankruptcy – it is rated R7 (versus R9), lets you keep your assets, and ages off sooner. Here is how the two compare for your credit, and how to decide.
Not sure which option fits your situation?
Consumer Proposal vs. Bankruptcy at a Glance
- Credit rating: proposal = R7; bankruptcy = R9 (most serious).
- How long it stays: proposal ~3 years after completion (up to 6 from filing); first bankruptcy 6-7 years after discharge.
- Your assets: a proposal lets you keep your home and car; bankruptcy can require surrendering some assets.
- What you repay: a proposal repays part of what you owe over up to 5 years; bankruptcy can be faster but with bigger consequences.
- Filed through: both go through a Licensed Insolvency Trustee.
Which Is Better for Your Credit?
For most people, a consumer proposal does less damage and recovers faster than bankruptcy. But the right choice depends on your income, assets and total debt. A Licensed Insolvency Trustee can confirm which you qualify for – and our overview of debt relief options compares the lighter alternatives too.
Rebuilding Your Credit Afterward
Whichever route you take, your credit can recover. Make every payment on time, open a secured credit card, keep balances low, and check your Equifax and TransUnion reports. See how to fix your credit in Canada.
Free, no obligation, no impact to check your options.
