How Long Does a Consumer Proposal Last?

If you're struggling with debt in Canada, a consumer proposal can provide relief by allowing you to settle your debts for less than you owe.

But how long does this process actually take?

What is a Consumer Proposal?

A consumer proposal is a legally binding agreement between you and your creditors, administered by a Licensed Insolvency Trustee (LIT). It allows you to pay back a portion of your debt over time, while the rest is forgiven.

It's an alternative to bankruptcy that helps you avoid losing assets while getting debt relief.

The Standard Duration: Up to 5 Years

A consumer proposal can last up to a maximum of 5 years (60 months). However, you can pay it off faster if you're able to, and there's no penalty for early payment.

Key Points:

• Maximum term: 5 years

• Minimum term: No set minimum, but typically structured over several years

• Early payment allowed without penalties

• Monthly payments are fixed and agreed upon at the start

Build Better Credit with KOHO

KOHO's Credit Building offers a safe way to build credit without the risks of traditional credit cards or lenders, helping you achieve the same goal: a stronger credit history.

With KOHO, you could:

• Have better credit in 4 months

• Build credit without a credit card

• See credit scores increase by an average of 31+ points in just 4 months¹.

KOHO reports your payments to Equifax on your behalf so you don't have to worry about it.

How Long Does It Stay on Your Credit Report?

A consumer proposal remains on your credit report for 3 years after you've completed all payments, or 6 years from the date you filed it—whichever comes first.

Example:

• If you complete a 3-year proposal, it stays on your report for 3 more years (total 6 years from filing)

• If you take the full 5 years to complete it, it stays on your report for 1 more year (total 6 years from filing)

What Happens If You Miss Payments?

Missing payments can have serious consequences:

• Missing 3 payments puts your proposal in default

• Your proposal may be annulled, meaning creditors can resume collection actions

• You may need to file a new proposal or consider bankruptcy

Your Path to Financial Freedom

A consumer proposal typically lasts up to 5 years, but you have the flexibility to pay it off sooner and move forward with your financial life.

While it will affect your credit for several years, it's often a better alternative to bankruptcy and provides a clear path to becoming debt-free.

^{¹Based on users with a starting score of 500 or less and who signed up for credit building in October 2024. Credit Building is not a credit repair tool and does not guarantee an improvement in credit score. Credit scores are based on complex models involving a variety of factors. Consistent on-time payments help improve scores and missed or late payments may cause credit scores to decrease. Outcomes may vary among users.}