If you’ve entered a consumer proposal to deal with your debt, you might be wondering if you can still get a loan. The good news is that it is possible to get a loan while in a consumer proposal. Just because you’ve taken steps to address your debt doesn’t mean you have to put your financial life on hold. No matter what you need the extra funds for, getting a loan while in a consumer proposal is doable, especially when you work with the right lender.
Key Points
1. It’s possible to get a loan while in a consumer proposal, though it will be much more challenging and your options will be limited.
2. You may have better luck applying with private lenders, who may be more open to lending to borrowers who are in a consumer proposal, though the interest rates may be higher.
3. It’s recommended to wait until after your consumer proposal has been completed and you’ve had time to rebuild your credit before applying for a loan.
Is It Possible To Get Approved For A Loan With A Consumer Proposal?
Getting approved for a loan while in a consumer proposal is challenging, but possible with private lenders who specialize in loans for borrowers with bad credit. These lenders will assess other factors, such as your income and recent financial behavior.
That said, your chances of loan approval may be higher if you wait until after your consumer proposal is complete. You may also have better luck applying for a secured loan rather than an unsecured loan. With a secured loan, the lender’s risk is reduced thanks to collateral backing the loan.
Regardless, your best chances will be with a private lender, until you build your credit.
Note: Lenders Look At More Than Your Credit Score
Your credit takes a hit during a proposal, but it is not the only thing a lender weighs. In Loans Canada’s analysis of loan applications, steady income and how you receive it made a real difference. Applicants who had their pay deposited directly into their bank account were far more likely to be approved than those who did not. A stable job and a manageable debt load can help offset a lower credit score.
What Kind Of Loan Can You Get While In A Consumer Proposal?
Some types of loans are much easier to get than others while your proposal is active. The table below gives you a quick sense of your options, and each one is explained in more detail further down.
| Loan Type | What To Know |
|---|---|
| Payday loan | Payday loans are easier to qualify for, even in a consumer proposal, because they generally do not require a credit check. The tradeoff is their very high cost, so they are best saved for a true emergency. |
| Cash advance app (such as Bree) | Cash advance apps like Bree do not check your credit, so a proposal will not hold you back. The catch is that you can only borrow a small amount, up to $750 with Bree. |
| Secured personal loan | A secured personal loan is one of your more realistic options. Backing it with an asset, such as a vehicle or savings, lowers the lender’s risk and makes approval easier despite your credit. |
| Unsecured personal loan | An unsecured personal loan is the hardest to get during a proposal since nothing backs it. It is still possible through private or bad credit lenders, but expect higher interest rates. |
Can You Get A Personal Loan While In A Consumer Proposal?
It’s difficult to get a personal loan during a consumer proposal because it hurts your credit score, making lenders see you as a higher-risk borrower. However, it may still be possible if the loan is secured by an asset. A secured loan requires collateral, which reduces the lender’s risk. Since the lender has an asset to recover if you don’t make your loan payments, they’re more willing to extend a loan to bad credit borrowers.
Find Out If You Qualify
Can You Use A Loan To Pay Off Your Consumer Proposal?
Yes, you can use a loan to pay off a consumer proposal, often through private lenders, with secured loans being easier to get approved for.
However, you should only consider this if your credit score and financial situation have improved and the boost to your credit justifies the loan’s interest charges. If you feel that a personal loan makes sense in your situation, you can use the funds to pay off your consumer proposal early by making a lump sum payment, increasing your payment amounts, or modifying your payment frequency. There are a few things to weigh before you commit, which we cover in paying off a consumer proposal with a loan.
You are far from alone if you are managing debt through a proposal. In 2024, consumer proposals made up 79% of the 137,295 consumer insolvency filings in Canada, which works out to nearly four out of every five filings.1
Can You Get A Payday Loan While In A Consumer Proposal?
Payday loans may be relatively easy to get approved for while in a consumer proposal compared to other loan types. That’s because payday loans typically don’t involve credit checks. So, even if you have bad credit due to a consumer proposal, you can still access a payday loan if you meet other requirements, including having sufficient income.
Keep in mind that this accessibility comes at a steep price. Payday loans carry some of the highest borrowing costs available, so they should be a last resort rather than a go-to option.
Can You Get A Bree Loan While In A Consumer Proposal?
Bree is a digital financial platform that provides quick cash advances to help cover expenses or bridge the gap between paycheques. You can get up to $750 within minutes of application, with no credit check required.
Given this, you don’t need good credit to get approved. So, if your credit score has been hurt by a consumer proposal, you may still be able to access a cash advance from Bree.
How To Improve The Odds Of Getting A Loan While In A Consumer Proposal
To boost your chances of getting approved for a loan while in a consumer proposal, consider the suggestions below. First, though, it helps to decide whether you should be borrowing right now at all.
Should You Apply Now Or Wait?
There are two realistic paths, and the right one depends on how urgently you need the money and how far along your proposal is.
Apply now if the expense is urgent and unavoidable, you have collateral or a cosigner to offer, and you can comfortably afford the higher interest rate. Expect to work with a private or bad credit lender.
Wait until it’s complete if the purchase can hold off. This is usually the better financial move, since it gives your credit time to recover so you qualify for lower rates and better terms.
Wait Until Your Consumer Proposal Is Complete
If time permits, you may want to wait until after your consumer proposal to apply for a loan. In fact, this may be your best bet. This will give you some time to improve your credit score, which will make it easier to qualify for a loan with lower rates and better terms. Lenders prefer to work with borrowers with good credit, so applying after your proposal can increase your approval chances.
Pay Off Your Consumer Proposal Early And Build Credit
Paying off your consumer proposal early will allow you to start rebuilding your credit sooner, making it easier to qualify for a loan. With a better credit score, you can secure a lower rate, making the loan less expensive. Plus, early repayment lets you move towards becoming debt-free sooner rather than later.
Get A Cosigner
A cosigner can help you get a loan while in a consumer proposal by reducing the lender’s risk. Since the cosigner has good credit and a strong income, their inclusion in the loan contract can improve your chances of loan approval and better loan terms. If you are considering this route, it helps to understand how a guarantor loan works before you ask someone to sign.
Add Collateral
Providing security to back the loan with a valuable asset can reduce the lender’s risk, making it easier to get approved for a loan. In this case, you would apply for a secured loan. With collateral, the lender can sell the asset and use the funds from its sale to recoup their losses if you default on the loan.
Given the reduced risk for the lender, they may be more willing to extend a loan to you despite your poor credit.
Improve Your Income And Employment Situation
While this may be easier said than done, increasing your income and finding steady employment can be key to loan approval while in a consumer proposal. Since a consumer proposal negatively affects your creditworthiness, you’ll need to at least show the lender that you earn a sufficient income and are steadily employed.
This is not just a hunch. In Loans Canada’s study of roughly 500,000 loan applications, the type and stability of your income moved approval odds more than almost any other factor. Full-time earners were funded well above the average applicant, while those with no employment income were funded far less often, only about a quarter as often as full-time workers.4
The single most controllable factor was direct deposit. Applicants who had their pay deposited straight into their bank account were nearly twice as likely to be funded as those who did not, so setting up direct deposit before you apply is one of the simplest ways to strengthen your file.4
How To Get A Loan While In A Consumer Proposal
To get a loan while in a consumer proposal, follow these steps:
Step #1: Find The Right Lender
Most prime lenders, like banks and credit unions, have strict regulations for their borrowers, so you may find it very difficult to gain approval from them. In that case, you may have to apply with an alternative, private, or bad credit lending source.
To find a lender that meets your needs, you can conduct a quick search using an online loan comparison site, like Loans Canada. Simply enter a few details about your financial situation and needs, and a list of lenders will populate, along with their offerings.
The alternative lending space is where you need to be most careful. Watch for these red flags before you sign anything:
Predatory Lender Red Flags To Watch For
Excessive fees. Hidden charges that go beyond industry standards should be something to be wary of when applying for a loan.
Guarantees. Lenders should not guarantee loan approval without first looking at your financial situation.
Lack of transparency. Some predatory lenders may use deceptive terms or don’t clearly explain loan conditions, leaving you in the dark about your loan, particularly its costs and your repayment obligations.
Aggressive tactics. Some lenders place a lot of pressure on applicants to sign quickly without enough time to thoroughly review the loan agreement.
Step #2: Determine The Lender’s Approval Criteria
Before applying for a loan, find out what the lender’s requirements are to make sure you meet them. This will save you time, hassle, and disappointment.
Step #3: Prepare Yourself To Apply
Again, as it should be with any credit product, it’s important to prepare yourself properly before you apply. You should even double your efforts, considering how unworthy of credit your consumer proposal will make you appear to be.
- Determine your loan amount. Remember to only apply for a loan amount that you’re 100% sure you can afford down the line.
- Find out the total cost. Get details about your loan, including the interest rate and all applicable fees.
- Factor all costs into your budget. Consider your other monthly expenses along with the cost of the loan, and see how they all fit with your budget. Generally speaking, you should have a debt-to-income (DTI) ratio, which is a measure of your debt relative to your income, of no more than 44% to take out a loan. This will ensure that you have enough income left over after your existing bills have been paid to cover your loan payments.
Step #4: Apply
Complete the lender’s loan application, ensuring that it’s accurate and not missing any information. You may also be asked to provide documents along with your application to support the information you provide. This may include the following:
- Bank statements
- Letter of employment
- Pay stubs
Can You Get A Mortgage While In A Consumer Proposal?
You may be able to get a mortgage while in a consumer proposal, but it can be very challenging. Rather than applying with a traditional bank, you may need to explore alternative options, such as private lenders. These lenders are not heavily regulated the way traditional banks are, so their loan criteria may not be as strict. However, their mortgages may be more expensive, given your lack of creditworthiness.
Otherwise, you may consider waiting until your consumer proposal is discharged before applying for a mortgage. This will give you more time to give your credit score a boost. To improve your chances even more, consider making a bigger down payment to lower the lender’s risk while reducing the amount you need to borrow. The full picture is covered in qualifying for a mortgage while in a consumer proposal.
Can You Get A Car Loan While In A Consumer Proposal?
Like other loan types, getting a car loan while in a consumer proposal is more challenging, but still possible. Again, alternative lenders may offer more accessible financing options.
The good thing about car loans is that they are a secured form of financing. In this case, your car collateralizes the loan, which reduces the lender’s risk and makes it a little easier to get approved. If you are weighing your timing, it’s worth reading about getting a car loan after a consumer proposal too.
How A Consumer Proposal Affects Your Credit
While a consumer proposal can eliminate the majority of your debt problems, it can have a negative, lasting effect on your credit. Here is how it shows up:
| How It Shows Up | What It Means |
|---|---|
| R7 credit rating | During your proposal, your credit rating will drop to an R7 status. This is the third-lowest rating, just above having your assets in repossession (R8) and bankruptcy (R9). |
| Time on your credit report | A record of your proposal can stay on your credit report for up to 6 years from the date you file, or 3 years after you complete it, whichever comes first.2 |
| Missed payments | If you fail to make your consumer proposal payments, your credit score can suffer even more. |
A proposal is still far less damaging than the alternative. If you had filed for bankruptcy instead, the road back would be tougher, and getting a loan after bankruptcy tends to come with even steeper hurdles.
What Is A Consumer Proposal?
A consumer proposal is a legally binding debt relief option that lets you settle your debts with creditors for less than the full amount owed. The process is facilitated by a Licensed Insolvency Trustee (LIT), who negotiates a repayment plan with creditors that usually lasts up to 5 years. Once filed, you’ll be protected from creditor efforts to collect the debt, including litigation and wage garnishment.
A consumer proposal lets you keep your assets, unlike bankruptcy. However, it has a serious effect on your credit score, which is why the decision to file a consumer proposal should not be made lightly.
Bottom Line
Getting a loan during a consumer proposal is tough, but possible, depending on the loan type, your current finances, and the lender. Secured loans from private lenders offer better chances than traditional loans from banks, especially if you have steady income or collateral. Your best bet is to wait until your proposal is complete to unlock better loan options and interest rates. Regardless, it’s best to develop better financial habits after your consumer proposal and focus on bringing your credit score back up to par. And if your income has taken a hit, say from a job loss, it helps to know how loans for the unemployed work before you apply anywhere.
Consumer Proposal Loans FAQs
If you miss 3 consumer proposal payments, your proposal may be automatically cancelled.3 That means you’ll revert to owing your creditors the full amount, plus any interest accrued on the debt since you first filed.
Generally speaking, a consumer proposal can last up to 5 years. However, the exact time it takes depends on your financial capability and your total debt.
Traditional credit cards may not be available to you while you’re in a consumer proposal. However, you can apply for a secured credit card, which simply requires a cash deposit as collateral. If used properly, a secured credit card can help you rebuild your credit score while using the card to make purchases. Prepaid credit cards are another option, though they don’t help build credit history.
Yes, you may be able to use your home equity to pay off your consumer proposal, as long as you have enough equity accrued. However, your lender may require that your proposal be completed first, while others may only require a specific amount of home equity.
Yes, a consumer proposal can forgive student loan debt, depending on the type of student loan and how long you’ve been out of school. Government-backed student loans may be eligible for forgiveness under a consumer proposal if it’s been at least 7 years since you’ve been out of school.3 Otherwise, you’ll still be responsible for repayment. Private student loans, on the other hand, can be included in a consumer proposal regardless of how long you’ve been out of school.
References
- Office of the Superintendent of Bankruptcy Canada. (2025). Insolvency statistics in Canada 2024. Government of Canada. https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/statistics-and-research/insolvency-statistics-canada-2024
- Equifax Canada. (n.d.). How long does a consumer proposal stay on your credit report? https://www.consumer.equifax.ca
- Government of Canada. (1985). Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3). Justice Laws Website. https://laws-lois.justice.gc.ca/eng/acts/b-3/
- Correia, P. (2026). Who really gets approved for a loan? Insights from half a million applications. Loans Canada. https://loanscanada.ca/stats/study-who-really-gets-approved-for-a-loan-insights-from-half-a-million-applications/
