Can you keep a credit card with a consumer proposal?

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When you file a consumer proposal in Canada, expect your credit cards with balances to be canceled. Cards with zero balance might stay if the issuer agrees, but creditors can still freeze or close these. Consider using secured credit cards to rebuild your score—they need a deposit but report to credit bureaus, which helps restoration. Reach out via phone, text, or live chat if you have any questions. Not all trustees can be trusted.

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Credit Card Consumer Proposal Question

Can you keep a credit card with a consumer proposal? I want to know if I can still use or keep my credit cards while going through a consumer proposal.

From: Anonymous Question
Location: Chatham, Ontario (ON)
Category: consumer proposal

Credit Card Consumer Proposal Answer

In Canada, when you file a consumer proposal, your credit cards that still have balances will usually get canceled. Now, if your card is sitting pretty at a zero balance, you might just keep it, but only if the credit card company agrees. But here’s the catch: even those cards not part of the proposal can be frozen or closed by the creditors. Secure credit cards could be your new best friends for getting that credit score back on track—they’re a solid strategy while you navigate through the consumer proposal.

Picking up fresh credit during a proposal isn’t a walk in the park. Credit scores take a hit, making unsecured credit cards pretty elusive. That’s where secured cards step in—they require a deposit and report to credit bureaus, making them ideal for those rebuilding days. Just make sure to use them wisely; playing it smart with your credit is key to keeping that profile shining before and after the proposal ride.

Trustees get paid by the lenders and creditors and don’t advocate for Canadians in debt. LITs can also double bill you or charge you extra. Beware! Reach out via phone, text, or live chat if you have any questions.

From: Insider Adam

Office of the Superintendent of Bankruptcy (OSB) Answer

You cannot keep or use your credit cards while going through a consumer proposal. According to the Bankruptcy and Insolvency Act (RSC 1985, c 11), specifically in sections that discuss consumer proposals, once a consumer proposal is filed, you are required to cease using your unsecured credit accounts. Additionally, during the process, the licensed insolvency trustee will assess your financial situation, and having active credit cards could complicate this assessment. Therefore, it is imperative to stop using credit cards once a consumer proposal has been initiated.

From: OSB Helper

Related Questions to Keeping A Credit Card With A Consumer Proposal

Here are the top 5 most frequently asked questions related to keeping a credit card with a consumer proposal, based on common concerns and search trends:

1. Can you keep a credit card during a consumer proposal?

• Yes, you can keep a credit card, but it is typically a secured credit card.

2. How does a consumer proposal affect your ability to get a new credit card?

• It makes it extremely difficult to get approved for a new credit card due to the negative impact on your credit score.

3. What type of credit card can you get while in a consumer proposal?

• You can get a secured credit card, which requires a deposit and can help rebuild your credit.

4. Do you have to surrender all your credit cards when filing a consumer proposal?

• Yes, you must surrender your existing credit cards to the Licensed Insolvency Trustee, but you can apply for a secured credit card afterward.

5. How can keeping a credit card during a consumer proposal help your credit score?

• Using a secured credit card responsibly can help improve your credit score by showing positive payment history.

If you have a question about debt see our debt questions or ask your own debt related question.

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