Twelve months out of a consumer proposal

None of the debt behind the $2,100 in monthly minimums was new bad luck — it accumulated the ordinary way, one card and one line of credit at a time, in the year after the proposal closed, pushing this household well past what household debt service ratio figures for Canada would call typical. The household was current on everything, but the minimums alone were consuming more of the budget than the mortgage itself.

The second obstacle sat beside the first: twelve months out of a consumer proposal is recent by most A-lenders’ internal seasoning standards, which commonly look for more time and a rebuilt credit history before extending new uninsured credit — a policy preference, not a published regulatory rule, but a real one in practice.

The equity was there to fix this: $680,000 in value against a $372,000 mortgage left substantial room to consolidate the $48,000 of debt into a single refinance, at a lender willing to look past the recent proposal.

TDS after the debt is cleared

The cash-flow relief, at contract rates

TDS falls from 46.2% to 35.0%, and the household frees up $1,772 a month at the rates actually charged — the debt is gone, replaced by one mortgage payment at a rate that reflects the recent proposal, not a permanent one.

An FSRA-licensed mortgage agent moved the file to a B-lender equity take-out rather than waiting out the A-lenders’ seasoning preference with the debt still compounding.

First, quantified exactly what the debt was costing — not just the balances, but the $2,100 in monthly minimums that were doing most of the damage to TDS. Clearing the debt, not just consolidating it, was the point.

Second, placed the refinance with a B-lender comfortable with a recently discharged proposal, where an A-lender’s seasoning preference would have meant more time on the sideline. What a realistic recovery timeline after a consumer proposal actually looks like — and how it differs by lender — is covered in our guide to the consumer proposal recovery timeline, and the broader B-lender landscape in how B-lenders assess a file.

Third, wrote a 24-month plan back to A, built around two re-established tradelines and a clean payment history on the new mortgage — both illustrative targets agreed with the client, not a guarantee any specific A-lender will approve the file when the time comes.

One mortgage, no consumer debt, and a documented plan back toward A-lending rather than an open-ended stay with a B-lender. Because this transaction is a refinance and not a purchase, no land transfer tax applies — that figure simply does not belong anywhere in this file’s closing costs.

Legal fees, appraisal costs and any discharge fee from the outgoing lender still apply and vary by firm and file — they are the only real cash items left once the debt itself is cleared.

• 01A discharged consumer proposal does not mean the debt problem is over. New high-interest debt can rebuild in the year after, often faster than the household notices, until the minimums start driving the ratios.
• 02Seasoning after a proposal is a lender preference, not a published rule. Some A-lenders want more time than twelve months; a B-lender willing to look past it can be the right bridge, not a permanent home.
• 03Clear the debt, don’t just move it. The relief here came from eliminating $2,100 a month in minimums entirely, not from shuffling the same balances to a lower rate.
• 04Write the return-to-A plan with specifics. Re-established tradelines and a clean payment history are concrete milestones a broker can track — a vague intention to “refinance again later” is not a plan.
• 05Confirm which taxes genuinely do not apply. No title transfer, no land transfer tax — worth stating plainly to a client who might otherwise expect one.