Do you lose your credit cards during a consumer proposal?

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Filing a consumer proposal often means saying goodbye to your credit cards, typically canceled by creditors. While you’re likely to go without them for up to five years, a secured credit card might help you rebuild your credit. Just handle it wisely to keep your credit on solid ground!

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Question

Do you lose your credit cards after a consumer proposal? I’m worried about losing access to credit through my cards once I file a consumer proposal. Keeping them would be ideal so I’m curious if they’ll still be available. What’s the deal?

From: Anonymous Question, Alberta (AB)

Debt Insiders Answer

Filing a consumer proposal in Canada typically means waving goodbye to your credit cards as creditors tend to cancel them. You’re likely grounded from using them for the duration of your proposal, which can stretch over five years. But don’t worry, there’s a silver lining! You might get a chance to snag a secured credit card after filing, which could be your ticket to rebuilding your credit score. Just be sure to handle this newfound credit carefully, like a freshly baked cake—too eager, and it might crumble!

From: Anonymous Question

Office of the Superintendent of Bankrupty (OSB) Answer

When you file a consumer proposal in Canada, your credit cards are generally canceled by the creditors. Under Section 53 of the Bankruptcy and Insolvency Act, once a consumer proposal is filed, creditors cannot take further action to collect on debts, which typically includes credit accounts. Therefore, you will lose access to your credit cards shortly after filing. Keeping them is not feasible, as the primary goal of a consumer proposal is to manage and settle your debts, often leading creditors to terminate your credit facilities.

From: This answer is provided by scanning the OSB Bankruptcy & Insolvency Act and related directives

Related Questions

Here are the top 5 most frequently asked questions related to the impact of a consumer proposal on credit cards, based on common concerns and online search trends:

1. Can I still use a credit card after filing a consumer proposal?

• No, you cannot use your existing credit cards, but you can apply for a new secured credit card.

2. How do I rebuild my credit after a consumer proposal?

• You can rebuild your credit by obtaining a secured credit card, making timely payments, and keeping your credit utilization rate low.

3. Will I be eligible for a credit card after completing a consumer proposal?

• Yes, you can be eligible for a credit card, typically a secured credit card, after completing your consumer proposal.

4. Can I include credit card debt in a consumer proposal?

• Yes, credit card debt can be included in a consumer proposal.

5. How long does it take to recover my credit score after a consumer proposal?

• It can take several years to recover your credit score, but consistent payments and responsible credit use can help improve it over time.

References

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