Yes. Unfortunately, this also happens any time a person cannot pay their creditors exactly as the creditors want to be paid, even if it is not your fault. Not paying your creditors, filing a Consumer Proposal or being forced into bankruptcy all lower your credit rating.

When you cannot meet the creditors’ demands and minimum payments are not getting you ahead financially, Baigel Corp. will explore with you what option works best for you, do the least damage to your credit rating and maximize your ability to rebuild your credit rating. 

In fact, by getting the debt under control and following some basic steps our financial counsellor will share with you, the Consumer Proposal helps you rebuild your credit.  So, yes, entering a Consumer Proposal will affect your credit rating and it may be positive depending on your circumstances.

Once you file a Consumer Proposal, it is recorded on your credit report with the major credit reporting agencies, Equifax, TransUnion, and Experian. This notation indicates that you have made a formal arrangement with your creditors to repay a portion of your debts over time.

A Consumer Proposal typically remains on your credit report for up to three years after you have completed all payments. During this period, it may impact your ability to obtain new credit or loans, as lenders will see that you have had financial difficulties.  However, they see that you did something about the situation and many lenders will, for example, finance a vehicle.  If your mortgage payments are up to date the lender will usually renew without question even if there is a Consumer Proposal.

Compared to bankruptcy or a credit report showing arrears, missed payments, defaults, collections and judgments, a Consumer Proposal is generally viewed more favorably by creditors since it shows your willingness to repay debts and avoid bankruptcy. Importantly, successfully completing a Consumer Proposal as soon as possible can help you accelerate the rebuilding of your credit sooner.
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