Do Banks Accept a Consumer Proposal? - Empireone Credit (2024)

If you’re having trouble paying your debts, you usually have two choices – a consumer proposal or bankruptcy.

A proposal has many benefits over a Bankruptcy, including the fact that you can keep your assets versus having to liquidate them to pay your creditors. Do banks even accept consumer proposals or would they rather you file bankruptcy?

The truth is that banks do accept consumer proposals in many cases. They are often more favourable to the bank than bankruptcy.

Here’s why.

Bankruptcy vs Consumer Proposal

From a bank’s perspective,bankruptcy is much worse than a consumer proposal. With a Bankruptcy, most banks walk away with little to nothing. You are insolvent, which is why you are filing bankruptcy, so there usually isn’t much left for most creditors or at least those that aren’t a high priority.

With a consumer proposal, though, banks get their fair share of payment. You’ll make payments for up to 5 years, which leaves a lot more time and room for more payments. A Bankruptcy, on the other hand, is usually over within 9 months with little to no money for the bank.

Banks have Control

Do Banks Accept a Consumer Proposal? - Empireone Credit (1)

Another reason banks prefer the consumer proposal over bankruptcy is they have more control. With a Bankruptcy, everything is court-ordered. Banks don’t have a say in anything and they have to abide by whatever orders are made.

Banks usually just have to accept the terms or ask to oppose the discharge. If they want to counter the terms, they have to petition to extend the Bankruptcy term which costs them more money and time.

With a proposal, banks have voting rights. They can say ‘yes’ or ‘no’ to the proposal. If at least half of your creditors vote ‘yes,’ then the proposal is deemed approved. Banks have 45 days from the date you file the proposal to vote.

Banks also have the option to ask for a certain amount of the debt owed to them. They typically keep it reasonable though because if they ask for too much, you may file bankruptcy instead. But, this control gives banks more hope that they’ll see at least a portion of what you owe rather than walking away with nothing.

How to Get a Bank to Accept your Proposal

Most banks accept aconsumer proposal. If you want to increase your chances of them accepting it, here are some simple steps.

Offer as much as you can Afford

Banks can tell when you’re trying to pull a fast one. If you are offering too little, they may not accept your offer. Instead, be reasonable and show that you want to make good on your debt. A proposal isn’t a way to get out of your debt, but instead is a way to make it easier to pay all your debts when your income decreases or another life issue gets in the way.

Offer More than the Bankruptcy would Offer

If your banks would get something from your bankruptcy, make sure your proposal is more attractive. If you know how much a bankruptcy would pay the creditor, make sure your proposal is for more. If you aren’t sure, working with a qualified debt consultant can help you determine which option would be best and know which offer they’d accept.

Work with a Qualified Debt Expert

Sometimes it’s impossible to tell what a bank would accept. For example, some are fine with 25% of what you owed and others want a much higher percentage.

AtEmpireOne Credit, our debt experts have worked with thousands of individuals, helping them to decide what option is best for them. Trying to figure it out on your own can be time-consuming and unsuccessful.

Banks know they can give consumers the runaround, making you promise more than you can afford to pay. This is where a debt expert can help you to reduce your debt by up to 80% and stop all interest.

What to do When a Bank Won’t Accept your Consumer Proposal

Do Banks Accept a Consumer Proposal? - Empireone Credit (2)

If a bank won’t accept your consumer proposal, it’s easy to feel defeated. They won’t take your offer so you can counter-offer and if that is voted against also, there is one other option – bankruptcy.

Is filing bankruptcy the end of the world?

It is not, but it would be easier to have a consumer proposal on your record versus the Bankruptcy. But, if you have too many creditors that vote ‘no’ to your proposal, you may not have a choice.

If you can’t get your proposal approved, we have other options. Ourcredit counsellorswill work with you to determine if you can’t pay the debt back according to the banks’ terms, then we’ll help you to file for bankruptcy.

Final Thoughts

Thinking about giving up on your debt can be upsetting, but sometimes a fresh start is what you need.

Filing a consumer proposal or even bankruptcy isn’t the end of the world. It just means you need a fresh start and to pick up the pieces again. While a proposal is a lot easier on your credit and you get to keep your assets, it does mean that you’ll pay a percentage of what you owe to your creditors.

No matter what happens, theprofessionals at EmpireOneare always by your side. We’ll help you figure out what steps you should take or which option is best for you to get out of debt and move on with your life.

Do Banks Accept a Consumer Proposal? - Empireone Credit (2024)


Do Banks Accept a Consumer Proposal? - Empireone Credit? ›

They can say 'yes' or 'no' to the proposal. If at least half of your creditors vote 'yes,' then the proposal is deemed approved. Banks have 45 days from the date you file the proposal to vote. Banks also have the option to ask for a certain amount of the debt owed to them.

Do banks accept consumer proposals? ›

We will only submit a proposal if it is affordable for you and likely to be accepted by your creditors. Your bank will review your consumer proposal budget as well. They will look at the expenses you've included and your family income to determine if the offer you make seems reasonable to them.

Can you open a bank account after consumer proposal? ›

One must have your name and date of birth. The other must have your name and address. No minimum deposit is required to open an account. A financial institution cannot refuse to open a bank account for you because you are Bankrupt or have a Consumer Proposal.

Can I still have a credit card with a consumer proposal? ›

A Consumer Proposal is your ticket to financial stability. With Farber's friendly experts by your side, we can negotiate a manageable debt repayment plan and, eventually, debt freedom. And yes, getting a credit card during and after a Consumer Proposal is totally doable.

Do most consumer proposals get accepted? ›

When a proposal passes, it forces all general unsecured creditors(with minor exceptions)to settle their claims against the debtor for the amount offered in the proposal. Consumer proposals get accepted in our office “eventually” at a rate of 95% or better.

What is the downside of a consumer proposal? ›

Disadvantages of a Consumer Proposal:

A proposal will usually take longer to complete than a bankruptcy. Lowering your monthly payment means longer time paying back, however, if your situation improves, you CAN pay off a proposal early. Credit rating is still affected – A Consumer Proposal DOES affect your credit.

Do I have to change banks if I do a consumer proposal? ›

Tip: Before making your proposal or filing bankruptcy, you and the joint account holder should open separate bank accounts. Your partner may open their account at the same financial institution and apply for overdraft or a line of credit, but we recommend you switch banks.

How long does it take to build credit after a consumer proposal? ›

After paying off debt you consolidated in a Consumer Proposal, or having your debt forgiven under personal bankruptcy, you can get a new mortgage, vehicle financing, credit card, bank loan, etc. In as little as two to three years you may even have a better credit rating than before you started!

What is the fastest way to build credit after a consumer proposal? ›

7 Tips to Rebuilding Credit Following a Consumer Proposal
  1. Monitor your Credit Report.
  2. Make On-Time Payments.
  3. Apply for a Secured Credit Card.
  4. Take Out an RRSP.
  5. Use a Credit Building Program.
  6. Set a Budget.
  7. Develop Healthy Credit Habits.
  8. Beware of Credit Repair Scams.
Feb 16, 2022

What happens if you withdraw a consumer proposal? ›

When a consumer proposal is cancelled, it means the agreement with the creditors you made has been voided, which has the following consequences: Any payments you have made go towards the Licensed Insolvency Trustee's fees, and dividends are paid to your creditors. You won't receive any money back.

What is the best credit card during a consumer proposal? ›

A secured credit card is one option for getting a credit card with consumer proposals. A secured credit card works like a regular credit card but is backed by a cash deposit you make to the lender.

Can you take out a loan while in a consumer proposal? ›

The answer is “yes.” However, remember that a consumer proposal will cause a temporary dip in your credit score. As a result, lenders will be more hesitant to extend credit to you. You'll face stricter loan qualification requirements and higher interest rates.

Why would a consumer proposal be denied? ›

“Why would a consumer proposal be rejected?” The usual reason is that your creditors want more money and if you refuse to acquiesce to their counteroffer, the proposal will be rejected, as previously described.

Does credit score go up after paying off consumer proposal? ›

Equifax and TransUnion state that it takes three years for a consumer proposal to be taken off your credit score after a last payment. That means the faster you fulfill your obligations and pay off your debts, the sooner you'll be able to rebuild your credit rating.

What is the catch of a consumer proposal? ›

Paying off debt with a consumer proposal will negatively affect your credit. You will get out of the unsecured debt you owe in 60 payments or less. The agreement is legally binding, so if you break it you will not receive a refund on the fees that you paid.

What is the maximum debt level for a consumer proposal? ›

Debt Required to File a Consumer Proposal

To file a consumer proposal, which is a debt option more drastic than debt settlement but only slightly better than bankruptcy, you must owe at least $1,000 in unsecured debt. The maximum that you can owe as a single person and still qualify for a consumer proposal is $250,000.

Can you get a loan after a consumer proposal? ›

Yes, you can get a loan after completing a consumer proposal, but your chances of qualifying for one will be low due to the impact it has on your credit. As a result, you'll likely only be able to get a loan from subprime lenders who often charge high interest and fees.

Do consumer proposals get rejected? ›

Yes, a consumer proposal can be rejected. A consumer proposal requires that at least 50% of your creditors vote in favour of your proposal. In the event they do not, it will not be accepted. Thankfully, when working with us the chance of a proposal being rejected is almost zero based on past clients.

Will TD accept a consumer proposal? ›

Each creditor included in your consumer proposal will get one vote for every dollar you owe them. For example, if you owe $5,000 on an RBC credit card, $20,000 on a TD Bank credit card, and $40,000 to the CRA, RBC will have 5,000 votes, TD will have 20,000 votes and the CRA has 40,000 votes.

Does a consumer proposal show up on a credit check? ›

If you file a consumer proposal, your creditors will report to the credit bureau that your debt was included in a proposal. Sometimes the creditors may make a mistake. They may say the debt was included in a bankruptcy.

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