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Can I Get a Credit Card While in Consumer Proposal?

Key Takeaway

You can get a credit card while in a consumer proposal, but you may only first qualify for a secured credit card or can get a prepaid credit card. You can also apply for other types of debt, such as a car loan, but it won't be easy until your credit rating improves.

Once you File a Consumer Proposal

When you file a consumer proposal with Licensed Insolvency Trustees, you must cut up all your current credit cards. While you may be able to manage purchases with your debit card and cash, having a credit card may also be useful, especially if you rely on it for everyday expenses or online transactions.

If you're considering filing a consumer proposal or bankruptcy to get debt relief, you may be wondering if you'll be able to get a credit card during this process. The answer is yes; you can get a credit card and other debts in a consumer proposal. In this post, we'll explain the different types of credit cards you can obtain while in a consumer proposal and how to use them to rebuild your credit.

Credit Card Options

Secured Credit Card

A secured credit card is one option for getting a credit card with consumer proposals. A secured credit card works like a regular credit card but is backed by a cash deposit you make to the lender. This deposit acts as collateral and helps to rebuild your credit by reporting your transactions to credit bureaus. The lender will still charge you for interest on any outstanding balances at the month's end. However, the lender is protected by your deposit if you cannot pay the balance on the credit card.

You can apply for a secured credit card with lenders who offer this option, such as Capital One, Home Trust and Neo Financial. These companies provide a variety of secured credit cards with different interest rates, fees, and rewards. As with paying any credit card, it's important to pay them on time and more than the minimum required to avoid further damaging your credit.

A secured credit card can be an important first step toward rebuilding your credit. While in a consumer proposal, you want to have activity on your credit reports to improve your credit rating. If you have no activity on your credit history, your credit score will stay the same or may even decline.

Prepaid Credit Card

A prepaid credit card differs from a secured credit card and is offered by VISA and Mastercard. The typical prepaid credit card is like a gift card that can be purchased at a retail store, such as a grocery store or gas station, for the number of dollars you pay for the card. Also, some banks and credit unions offer reloadable prepaid credit cards that will have your name on them. These cards may also have rewards offered on them for purchases you make.

Prepaid credit cards are really not much different than debit cards but may be accepted at more stores as they can be used wherever credit cards are accepted. This can be useful if you need to purchase something where a credit card is required but don't have one. However, a prepaid card is not considered credit for purposes of credit reporting, so it will not improve your credit score and only has a specific limit of funds before it can no longer be used or needs to be reloaded. This type of credit card should be used as a convenience rather than to rebuild your credit score.

Unsecured Credit Card

As you rebuild your credit rating while in a consumer proposal, you could apply for a regular unsecured credit card. These are your typical credit cards where you don't provide any deposits upfront with the lender, and they are likely to offer rewards for dollars spent on the card.

These may be more difficult to qualify since you aren't providing any deposits to the lender. Also, the lender may be concerned if you will make the payments since you would have recently filed a consumer proposal. However, you may still qualify for one with lower limits, but it may take some time before you will be approved.

Using a credit card can further help in rebuilding your credit scores as the balance and payment histories are recorded monthly on your credit record. Though be sure any purchases you make on your credit card can be repaid in full, or you could find yourself in problems with your debt and incurring high-interest rates.

Rebuild Credit Rating

Obtaining an unsecured or secured credit card can be a great first step to rebuilding your credit during a consumer proposal. It is important to have monthly activity on your credit record, such as purchases or improving your credit score and showing a solid credit history will be difficult. Using a credit card for everyday items such as groceries and gas, then paying off the balance the following month before the payment is due. This is a common method to start rebuilding your credit rating.

While rebuilding your credit, you should also obtain a credit report from a credit bureau to ensure the information is accurate. All your debts should be listed there, but if there are any debts you don't know about or find errors on credit reports, you should contact Equifax and Transunion immediately. Having errors on your credit report will further hurt your credit score. Also, someone could steal your identity and is using your credit and not make payments. If you don't monitor your credit history, then you won't know. We recommend that you take a proactive approach to your credit.

Lastly, the monthly consumer proposal payments will not be counted towards your credit reporting with the credit bureaus. However, they will be notified when you have completed your consumer proposal.


In summary, getting a secured credit card while in a consumer proposal can be a great way to rebuild your credit. You can use it towards items you will purchase anyway, like groceries and gas, then paying off the entire balance the following month on time will help create a positive credit history. Your credit score could then improve while you pay off your consumer proposal. Later, you may qualify for a regular credit card with a higher limit.

Have more questions about keeping a credit card with a consumer proposal or considering filing a consumer proposal? Contact Litvack Group to get relief for your financial stress. As a Licensed Insolvency Trustee, we are available by phone, video or in person to help discuss your financial situation and find the best solution.


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