Borrowing after a consumer proposal: what lenders can see and what they cannot

What changes in this situation

A consumer proposal can only be administered by a licensed insolvency trustee, and trustees are regulated by the Office of the Superintendent of Bankruptcy Canada. Completion does not erase the record; it changes its status. Once the trustee issues a certificate of full performance, the proposal is marked completed, and the notation then runs for 3 years after completion or 6 years from filing, whichever comes first. For comparison, a first bankruptcy stays on a credit report for 6 years after discharge.

That creates two distinct periods. In the first, your file shows a completed insolvency, and a lender is reading a recent negative marker alongside whatever payment history you have built since. In the second, the notation has aged off and you are assessed on the record that remains. Most questions about unsecured private loans and a personal loan for bad credit land in the first period, because that is when the need for money and the state of the file are in tension.

One more thing changes: certainty. Before the filing, the terms were set by the proposal itself. After it, the answer depends on the individual lender, its licence, its risk appetite and your income, rather than on a rule that applies to everyone in the same way.

What a lender can and cannot see

Canada has two national credit reporting bureaus, Equifax Canada and TransUnion Canada, and a free copy of your credit report is available from each. Which one a lender pulls matters, because your file is not necessarily identical at both. Any lender that runs a credit check will see the proposal, whether it has been completed, and how you have handled credit since you filed.

What a lender cannot see is the reason. A credit file does not explain that the filing followed a job loss, a separation, a business failure or a health event. It does not show that you have paid rent, utilities and every remaining account on time for two years, unless those payments are reported to a bureau. It does not know your full income until you document it, and it cannot judge how stable that income is until you show the history behind it.

So the file a lender works from carries a strong marker and very little context. That is why income, employment tenure and time since completion carry more weight in this situation than they would for a borrower without an insolvency history. If something goes wrong later, note that federally regulated financial institutions' consumer complaints go to the Financial Consumer Agency of Canada, while provinces license and supervise most other lenders, so the right place to raise a concern depends on who you borrowed from.

To be direct about our own role: loanmoose.ca is not a lender. It does not make loans, set rates or make credit decisions. It is a matching and comparison service, and any offer, price or decline comes from a licensed lender applying its own criteria to your application.

Routes that exist

• Unsecured private loans from provincially licensed, non-bank lenders. Lending in Canada is licensed provincially, so the regulator and the rules differ by province and territory. Some of these lenders price for risk and weigh income, banking history and time since completion rather than a single notation on the file. The trade-off: pricing is usually higher than a bank's, approved amounts tend to be smaller, and you should confirm the licence with the provincial regulator before you sign anything.
• Credit unions. These are provincially regulated and often weigh membership history and local relationship, not only the bureau file. The trade-off: membership requirements, a smaller footprint, and policies after an insolvency that vary from one institution to the next.
• Secured lending against an asset. At federally regulated lenders, a home equity line of credit is generally limited to 65% of appraised property value, with total secured lending usually capped at 80%. The trade-off: a home or vehicle backs the debt, so a missed payment puts that asset at risk. If a mortgage is part of the plan, federally regulated mortgage lenders generally work to a total debt service ratio ceiling of about 44% and qualify an uninsured mortgage at the greater of the contract rate plus 2 percentage points and 5.25% under OSFI Guideline B-20, though insured mortgages and provincially regulated lenders are not all subject to B-20.
• A loan with a co-signer or guarantor. A second person's credit strength can offset a thin or damaged file at some lenders. The trade-off: that person is on the hook for the balance if you cannot pay, and their own credit is exposed from the day the loan funds.
• Waiting, and rebuilding the file first. Time reduces the weight of the notation, and a documented run of on-time payments does the rest. The trade-off: this route does not solve a need for money this month, and it only works if something is reporting your payments.
• Short-term payday-style credit. Where a province operates a licensed payday lending regime, the federal Payday Lending Regulations (SOR/2024-114) cap the cost of borrowing at $14 per $100 advanced. Some provinces set a payday cap lower than $14 per $100, and the lower cap applies. Quebec does not license payday lending, which effectively prohibits the model there. A payday loan is generally up to $1,500 for a term of 62 days or less. The trade-off: the cost per dollar borrowed is high, and this type of credit generally does not build a positive credit history.

What to have ready

1. Your certificate of full performance from your trustee, plus the dates the proposal was filed and completed. Lenders use those dates to calculate where you sit in the 3-year and 6-year windows.
2. A current credit report from each of Equifax Canada and TransUnion Canada, so you know what a lender will see before it sees it.
3. Proof of income: recent pay statements and an employment letter with your start date, or, if you are self-employed, recent notices of assessment and business account statements.
4. Bank statements covering the last several months, showing regular income deposits and no returned pre-authorized payments.
5. A one-page budget listing housing cost, existing debts and other obligations. These are the numbers used to test debt service ratios, and lenders will ask for them.
6. Identification, proof of address, and a short list of any asset you could pledge as security with its approximate value.

What not to do

• Do not pay a fee up front to a person or company that promises a loan before any funds move. A legitimate lender discloses the full cost of borrowing and does not require payment to be considered.
• Do not apply to a long list of lenders in a short window. Multiple credit checks in a compressed period are visible on the file you are trying to repair.
• Do not leave the proposal off an application or round your income upward. Lenders pull the bureau file in any case, and misstating either item on a credit application carries consequences that go beyond a decline.
• Do not judge an offer by the monthly payment alone, and do not treat a published benchmark as a quote. The Bank of Canada publishes a policy interest rate, a prime rate, conventional mortgage rates and Government of Canada benchmark bond yields, and these are benchmarks rather than offers. Compare the total cost of borrowing instead, keeping in mind that the Criminal Code criminal rate of interest is 35% per year under section 347.