You’ve finished (or almost finished) your consumer proposal. Congratulations – that’s a huge accomplishment, which you’ve been working towards for years!
Now that you’re done, you may be wondering: What does life after a consumer proposal look like? What can I be doing now to start rebuilding my credit?
Being “done” your consumer proposal means you’ve completed all the required terms of your proposal, including all payments. At this point, you’re free from any obligation to pay the balance of your debts. Just remember, although your consumer proposal has been completed, it will still appear as a line on your credit report for three years after you’re done (or six years from when you started—whichever comes first). That means it’s good to start taking steps now to improve your credit rating.
With that in mind, here are six ideas for what you should do after a consumer proposal:
1. Make sure your “Certificate of Full Performance” is recorded
When you’ve completed your consumer proposal your trustee will sign your “Certificate of Full Performance”. This document is your proof that you have met all your obligations, and you are officially released from any outstanding debts included in your proposal.
You will want to make sure that your certificate is sent to Equifax and TransUnion. This is important because you will likely see a 40-55 point increase in your credit score once it has been recorded.
Make sure to talk to your trustee about whether they will be faxing your certificate or if this is something you need to do yourself. The process is different with different trustees, so make sure you ask your trustee about this process and understand your obligations.
2. Get your credit report checked (through a credit consultation)
Unless your trustee provides follow up support to clients, once you complete your consumer proposal, your relationship with the trustee will also be finished.
However, you’ll likely still have lots of questions, from “What next?” to “How long does it take to rebuild credit after a consumer proposal?” There may be financial goals you want to reach where understanding your credit score is important.
We recommend having a consultation with a trained credit consultant. A consultation can help you identify anything on your credit report that’s negatively affecting your score, like an item in collections, and explain the options available to continue rebuilding your credit.
Working with a credit consultant is also a good way to get peace of mind by making sure there’s been no fraudulent activity and that everything is correct in your records… Unfortunately, mistakes can happen!
At Climb, we offer a free credit consultation to help you understand your credit score.
During your consultation, you’ll also receive sound advice for the next steps you can take to rebuild your credit. For example, you might benefit from using a revolving trade line, such as a credit card, or an instalment tradeline, such as a loan payment or Accelerator Plan, which will be reported every month and can help boost your rating.
3. Identify a new financial goal
Over the past five years, finishing your consumer proposal has probably been one of your top financial goals. And you made it!
This is a major achievement, and you can enjoy the satisfaction of reaching your goal.
But now is not the time to lose your focus. You’ve proven your ability to meet financial goals, so it’s time to look ahead and identify your next goal.
People tend to be most successful when they have an objective in mind. After all, if you’re working towards a specific target, it’s easier to make good decisions when it comes to spending.
Not sure what your next goal should be? It may be helpful to think about short, medium and long-term goals. Some common short-term goals might include creating an emergency fund or saving for a special purchase – now is the perfect time to start putting aside money for holiday gifts. A medium-term goal could be buying a new car or tackling a home improvement project. Thinking long-term, you may focus on saving for a house down payment or retirement.
When you have something you’re working towards, it will be easier to avoid falling back into old habits that were limiting your financial success in the past.
4. Get advice if you’re looking for a mortgage, car loan, or line of credit
Your financial dreams after a consumer proposal may involve applying for new credit, like a mortgage for a new home or a car loan.
You may think that life after a consumer proposal means you need to delay or let go of these plans. However, it is usually possible to get access to mortgages, car loans and lines of credit following a consumer proposal—if you know where to look.
There are brokers who specialize in working with people who are rebuilding their credit. Do your research and look for a trustworthy and reliable broker who will be able to advise you on your options. Your goals may be more achievable than you think!
5. Resist the temptation to overspend
The consumer proposal process has likely taught you a lot about your financial habits, as well as strategies to maintain a budget. As part of your counselling sessions, you probably had to do a detailed review of income and expense statements. You’ve built a lot of knowledge over the past few years that can help you secure a brighter financial future.
Keeping track of the money that’s coming in and where it’s going out is a great habit to keep. If you manage to continue your budget, you’ll know when you’re in danger of overspending. You’ll also be able to see more clearly how much money you can put towards your goals each month.
6. Save the money you were putting towards your consumer proposal
During your consumer proposal, you built the habit of setting aside the money you needed to meet your obligations each month. Why not take the money you were using for your consumer proposal and put it toward your new financial goals? That way you can maintain a habit you’ve already formed—and you’ll get to reach your goals much faster.
You can set up automatic transfers into your savings account for the same amount you were paying on your proposal or —if you’d like to rebuild your credit and save at the same time—set up a new Climb Accelerator Plan. With the Accelerator Plan, you set a goal, make monthly payments, and once you complete your term you get your saved money back. Throughout the plan, Climb reports your payments to TransUnion and Equifax which helps establish a positive payment history to rebuild your credit score.
Reaching a major milestone, such as finishing your consumer proposal, is something to be celebrated. With a blank slate, you get to decide what happens next!
If you’d like to start with a free credit consultation, we’re here to support you.