Credit Cards

Consumer Proposal appears Bankruptcy in Credit Report.

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  • Jan 13th, 2020 12:11 pm
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[OP]
Newbie
Aug 14, 2019
2 posts

Consumer Proposal appears Bankruptcy in Credit Report.

Hello,

I had a rough financial time in past and did a Consumer Proposal in November 2017. I paid off all the debt in June 2019 and got the Certificate of Performance for Consumer Proposal.

I saw the TrasnUnion report now and it states that I have a Bankruptcy in Public Record section. Is this normal or was a mistake done?

I wrote an email to Insolvency Counselor - A Farber and Partners, and they told me that the Consumer Proposal does appear as Bankruptcy in Credit File.

Did someone else go through the same experience?

Now, I am desperately trying to re-establish credit and applied to Capital One for a Secured Mastercard - but it did not get approved online and they said they will send me a letter in mail.

I live in Montreal and work as an IT contractor. I make good money.

Have a mortgage to take in March 2020 for Condo I booked in June 2017 - now I do not think it would be possible.

Any suggestions would be much appreciated to improve credit.

Thank you.
Matt
10 replies
Jr. Member
Mar 31, 2015
121 posts
64 upvotes
Etobicoke, ON
MattP22127 wrote: Hello,

I had a rough financial time in past and did a Consumer Proposal in November 2017. I paid off all the debt in June 2019 and got the Certificate of Performance for Consumer Proposal.

I saw the TrasnUnion report now and it states that I have a Bankruptcy in Public Record section. Is this normal or was a mistake done?

I wrote an email to Insolvency Counselor - A Farber and Partners, and they told me that the Consumer Proposal does appear as Bankruptcy in Credit File.

Did someone else go through the same experience?

Now, I am desperately trying to re-establish credit and applied to Capital One for a Secured Mastercard - but it did not get approved online and they said they will send me a letter in mail.

I live in Montreal and work as an IT contractor. I make good money.

Have a mortgage to take in March 2020 for Condo I booked in June 2017 - now I do not think it would be possible.

Any suggestions would be much appreciated to improve credit.

Thank you.
Matt
Try Canadian Tire Mastercard. They do give credit to the people who had past bankruptcies. You can put a security deposit from 1 to 10k and apply for the Home Trust Secure Visa as well.
I dont know much about mortgages but I think you can try with a 2nd rated lender like Home Trust or go to a broker. You will pay a higher rate of interest but unfortunately, that is what happens with people who have filed for bankruptcies before and taking a mortgage after.

Also, I wanted to mention, the trustee or whatever you used mustve screwed you because you coulda done bankruptcy and at least pay much less to the creditors. To pay in full and to come to almost the same result, being having a bankruptcy on your record, the CP wasnt worth it.

And dont worry! Everyone makes mistakes but life goes on and things will get better! Its just going to be a little more expensive for you to obtain credit or mortgage, thats all.
Last edited by ToniB1 on Aug 15th, 2019 11:33 am, edited 2 times in total.
Deal Addict
May 16, 2017
1751 posts
2218 upvotes
Consumer Proposal / Bankruptcy = effectively the same in terms of credit reporting but here is what the Credit Counseling Society says:

"One of the worst things you can possibly do for your credit is to file a consumer proposal or file for bankruptcy. Both have the same effect on your credit and typically remain on your credit reports for roughly the same length of time (a consumer proposal typically takes around 5 years to pay off and then the record lasts on your credit report for another 3 years after that. So it’s normal for a proposal to impact someone’s credit for around 8 years – even with a credit repair program. Bankruptcy payments last for 9 to 21 months. After that, the record stays on your credit report for 6 to 7 years depending on your province. So a first-time bankruptcy can impact your credit for 7 to 9 years).

People who sell proposals will usually split hairs about the difference in how a proposal is reported on your credit reports versus a bankruptcy. Technically, debts included in a proposal will report as an R7 (really bad) on your credit reports and debts included in a bankruptcy will report as an R9 (the very worst). But this is only half the story. The other half is that your credit report also displays a special warning notifying creditors that you have become insolvent and have received court ordered protection.

In the eyes of the court system, the credit reporting system, and banks, consumer proposals and bankruptcies are very close to the same thing: they are seen as insolvency. The difference in the way the two are reported on your credit report is so small that a lot of lenders can’t actually tell whether you actually filed a consumer proposal or bankruptcy. From a bank’s or credit union’s point of view, they’re not interested in splitting hairs to figure out the difference. To them, both mean the same thing: instead of repaying your debts as you initially agreed to, you sought court protection and only repaid a small portion of what you owed. You may have had some very good reasons for becoming insolvent, but even for the most compassionate banker, it’s very hard for them to help you until the record of your insolvency falls off your credit report.

Obtaining credit after filing a consumer proposal or bankruptcy is a huge problem for a lot of people. There are things you can do to try and restore your credit score as quickly as possible without paying credit repair companies thousands of dollars, but until the record of your insolvency is removed from your credit reports, obtaining credit can often be challenging."
Jr. Member
Mar 31, 2015
121 posts
64 upvotes
Etobicoke, ON
robsaw wrote: Consumer Proposal / Bankruptcy = effectively the same in terms of credit reporting but here is what the Credit Counseling Society says:

"One of the worst things you can possibly do for your credit is to file a consumer proposal or file for bankruptcy. Both have the same effect on your credit and typically remain on your credit reports for roughly the same length of time (a consumer proposal typically takes around 5 years to pay off and then the record lasts on your credit report for another 3 years after that. So it’s normal for a proposal to impact someone’s credit for around 8 years – even with a credit repair program. Bankruptcy payments last for 9 to 21 months. After that, the record stays on your credit report for 6 to 7 years depending on your province. So a first-time bankruptcy can impact your credit for 7 to 9 years).

People who sell proposals will usually split hairs about the difference in how a proposal is reported on your credit reports versus a bankruptcy. Technically, debts included in a proposal will report as an R7 (really bad) on your credit reports and debts included in a bankruptcy will report as an R9 (the very worst). But this is only half the story. The other half is that your credit report also displays a special warning notifying creditors that you have become insolvent and have received court ordered protection.

In the eyes of the court system, the credit reporting system, and banks, consumer proposals and bankruptcies are very close to the same thing: they are seen as insolvency. The difference in the way the two are reported on your credit report is so small that a lot of lenders can’t actually tell whether you actually filed a consumer proposal or bankruptcy. From a bank’s or credit union’s point of view, they’re not interested in splitting hairs to figure out the difference. To them, both mean the same thing: instead of repaying your debts as you initially agreed to, you sought court protection and only repaid a small portion of what you owed. You may have had some very good reasons for becoming insolvent, but even for the most compassionate banker, it’s very hard for them to help you until the record of your insolvency falls off your credit report.

Obtaining credit after filing a consumer proposal or bankruptcy is a huge problem for a lot of people. There are things you can do to try and restore your credit score as quickly as possible without paying credit repair companies thousands of dollars, but until the record of your insolvency is removed from your credit reports, obtaining credit can often be challenging."
He can get credit from Canadian Tire or go with a deposit and secured HOme Trust Visa for up to 10k if his salary is good as he says and have a length of employment with his current company. It's not that tragic and he is clearly depressed so this is the route he can take. He can go ask a broker for a mortgage or go with Home Trust after he gets the secured CC from them and uses it responsibly. The only downside will be he will pay a higher interest rate and thus his condo will be more expensive for him than for another person without bankruptcy on their file. Life goes on!
Newbie
Aug 11, 2019
5 posts
11 upvotes
I filed last July and I was just approved for the Triangle Mastercard ($1000 CL) and the CapitalOne Guaranteed ($3600). My CP is still active. I make my payments regularly and had no trouble getting approved. Suggest you try Triangle. Good luck!
Deal Addict
Feb 26, 2006
3576 posts
1689 upvotes
Ottawa
You'll get a mortgage don't worry about it. Keep building credit. Get secured cards. Cell phones. Etc. And just be responsible. Your mortgage will happen with proven paid taxes. Income, and bank records to prove it.

Yes you may pay higher interest for a year or two at worst. But you'll be fine and it'll work out.
[OP]
Newbie
Aug 14, 2019
2 posts
Hello all,

I am really grateful to all of you. There is really light at the end of the Tunnel.

Have a great day ahead.

-Kind Regards,
Matt
Member
Aug 17, 2006
397 posts
339 upvotes
MattP22127 wrote: Hello all,

I am really grateful to all of you. There is really light at the end of the Tunnel.

Have a great day ahead.

-Kind Regards,
Matt
Just to add to the above comments; the secured CC are good ways to re-establish credit. Don't use credit unless you really need to and if your really need access to credit cards, look at Stack or Soho which are reloadable credit cards but at least it works like a credit card on the MasterCard and VISA exchange.

Another thought for your coming up mortgage is talk to a mortgage broker and get pre-approved mortgage which they will usually hold for 90 days. Considering they have access to multiple products they may only need to do a first credit check and shop your profile and get the right product that's works for you. Other than that your current bank may help but the rates are usually not great talking to standard financial advisors there so going outside to external agents who work for the bank but not branch (typically mortgage brokers) do seem to have more pull and offer competitive rates even compared to their own banks. Good luck!
Newbie
Apr 4, 2019
2 posts
Hi Matt
Just came out similair with a big name firm here in Montreal. I wish they explained the impact a bit better.

Anyhow ; I went to see a broker that is used to deal with complicated case. We had some work to do to clean up the bureau has information wasn’t reported properly.

In they end I had able to change mortgage 3 months after the certificate of completion.

Dont know if this will help
Jr. Member
Mar 7, 2011
102 posts
90 upvotes
ToniB1 wrote: ...
Also, I wanted to mention, the trustee or whatever you used mustve screwed you because you coulda done bankruptcy and at least pay much less to the creditors. To pay in full and to come to almost the same result, being having a bankruptcy on your record, the CP wasnt worth it.

And dont worry! Everyone makes mistakes but life goes on and things will get better! Its just going to be a little more expensive for you to obtain credit or mortgage, thats all.
You really don't have enough info here to assume that he was "screwed".

Perhaps he had assets that he didn't want to give up? Consumer proposal lets you keep those.

Anyway, good luck to the OP.
Capital One Secured is a good rebuild credit card that will likely work for you.
Newbie
Jan 12, 2020
1 posts
I think the problem is where you live. Quebec recently raised the minimum monthly payment on all credit cards to 5% of the balance while all other provinces are Interest plus $10, or 1%.

What this means for Quebecers is lower limits and more stringent underwriting as your approval is based on what you can pay back.

For example a balance with $5000 owing, in Quebec would have a minimum payment of $250, while in the rest of Canada, just $50z

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