Can You Borrow Money During a Consumer Proposal?

Many people struggling with debt ask the same question: once you are enrolled in a consumer proposal, is it still possible to obtain credit or take out a loan? This is a perfectly understandable concern, especially when you are working to regain control of your finances. At Bernier & Associates, we help clients every day in Gatineau, Ottawa, Montreal, and throughout Quebec and Ontario better understand their options and achieve lasting financial stability.

Can You Borrow During a Consumer Proposal?

The short answer is yes, but there are important limitations. If you are participating in a consumer proposal, you are still legally allowed to borrow money. However, if the amount exceeds $1,000, you are legally required to inform the lender that you are currently involved in an insolvency proceeding.

This means access to credit may be more limited. Financial institutions typically view individuals in a consumer proposal as higher-risk borrowers. As a result:

• Interest rates may be higher

• Lending conditions may be stricter

• Some loan applications may be declined

For this reason, it is important to carefully consider whether taking on new debt is truly necessary during this period.

Why Should You Avoid Taking on New Debt?

Although borrowing remains possible, it is generally not recommended. A consumer proposal is designed to help you reduce your debt and regain financial balance. Adding a new loan can slow your progress and increase financial stress.

A Licensed Insolvency Trustee will often encourage you to focus on financial stability rather than accumulating additional debt. The goal is to rebuild your financial health one step at a time.

What Are the Alternatives?

Instead of taking out a new loan, several options may be available depending on your circumstances:

• Debt consolidation: Before reaching the point of filing a consumer proposal, this option allows you to combine multiple debts into a single monthly payment.
  

• Personal bankruptcy: A process that can eliminate debt when financial obligations become overwhelming.
  

• Insolvency services: Comprehensive guidance to assess your situation and determine the most appropriate strategy.

Our team of Chartered Professional Accountants (CPAs) and Licensed Insolvency Trustees has the expertise required to guide you with professionalism, transparency, and care. Every debt relief solution is tailored to your financial reality and long-term goals.

Personalized Advice Close to Home

Whether you are located in Ottawa, Gatineau, Montreal, or one of the many communities we serve throughout Ontario and Quebec, you can benefit from personalized support. We understand the local economic realities and the challenges associated with debt.

Consulting a Licensed Insolvency Trustee is a concrete step toward regaining control of your financial future. Contact Bernier & Associates today for a confidential consultation. We are here to help you move toward a lasting solution tailored to your unique situation.