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Your cellphone account can impact whether you’ll be approved for a mortgage.

Equifax and TransUnion are the two main credit reporting agencies in Canada. They collect all the data on your loans, lines of credit and credit cards to create your credit report and calculate your credit score. This information is then used by lenders—including mortgage lenders—to determine whether you’re a good credit risk.

Recently, both credit reporting agencies started including cellphone accounts in their credit reports. This means if you make a cellphone payment after the due date, it appears on your credit report and reflects negatively on your borrowing profile. Even worse, if you allow your cellphone account to go delinquent and it’s sent to a collection agency, not only does this appear on your report, it can also reduce your credit score. Mortgage lenders use this information to make underwriting decisions. Therefore, having a negative record with your cellphone provider can actually impact your likelihood of being approved for a loan and increase the interest rate you’ll pay.

If you’ve recently walked away from a cellphone contract, it’s a good idea to get the company to put in writing that the contract has been fulfilled and is now closed. This can help prevent any damage to your credit rating. We are always pleased to help if you want more information on how to preserve or improve your credit rating.

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What is the difference between a Consumer Proposal & Bankruptcy?

There is much confusion today regarding the difference between a consumer proposal and a bankruptcy.

They both fall under the Bankruptcy and Insolvency Act and allow you to extinguish unsecured debts but there are some very important differences as illustrated below:

Consumer Proposal:

A consumer proposal is an offer you can make to your creditors to pay off the debt as an interest free payment over a period of up to 5 years. Very often your creditors will accept less than what you own depending on your financial circumstances. Usually you will need to offer more than what the creditors would have otherwise received had you filed for bankruptcy. When you file a consumer proposal with a trustee in bankruptcy your assets are fully protected from the creditors, interest stops on your unsecured debts and creditors calls stop.

Consumer proposals can eliminate the debts such as credit cards, personal loans & lines of credit, over drafts, Tax & HST, student loans more than 7 years old, medical service plan and mortgage shortfalls.


When you file for bankruptcy your assets are not protected from the creditors and may be seized by a trustee in bankruptcy in order to pay off your debts.  Also, a portion of your income may be taken each month by the trustee in order to pay your creditors.

Unlike consumer proposal where the agreed monthly payments are fixed, in a bankruptcy your income is monitored and payments to your creditors are increased as your income increased. Also, if you win or inherit money during the bankruptcy period or receive a tax refund then the trustee will take this to pay your creditors. These monies would be protected in a consumer proposal.

In summary, a consumer proposal allows consumers to make an offer to their creditors to pay back what they owe through a fixed, interest free, monthly payment while protecting their assets.

Article courtesy from Peter Temple, Debt Consultant from 4 Pillars Consulting