FORECLOSURE, BANKRUPTCY, CONSUMER PROPOSAL & CREDIT COUNSELING

When debt becomes overwhelming, homeowners often struggle to understand the differences between foreclosure, bankruptcy, consumer proposals, and credit counselling. Each option has very different consequences — especially when it comes to future mortgage approval.

Here’s what most people don’t realize about these situations 👇

1️⃣ Foreclosure has lifelong consequences

Foreclosure happens when a homeowner falls so far behind that the lender legally repossesses the home.

✔️ process varies by province

✔️ lenders prefer to avoid foreclosure

✔️ Saskatchewan is one of the most complex jurisdictions

A foreclosure stays on your credit report permanently — unlike bankruptcy or consumer proposals, which eventually fall off. Future lenders often require **20% down minimum** for anyone with a foreclosure history.

2️⃣ Bankruptcy and consumer proposals are treated similarly

Both are handled by a Licensed Insolvency Trustee and include all major creditors — even student loans and CRA in most cases.

✔️ both impact credit the same way

✔️ both require rebuilding credit afterward

✔️ both require a discharge before recovery can begin

After discharge, the first step is to obtain new credit (usually a secured credit card). Avoiding credit entirely will prevent you from ever qualifying for a mortgage again. Always notify Equifax and TransUnion once discharged so your file can be updated correctly.

3️⃣ Credit counselling is NOT the same as insolvency

Credit counselling helps people who can still make payments but need structure and budgeting support.

✔️ focuses on repayment plans

✔️ does not include CRA or student loans

✔️ creditors can decline participation

This means you could still be left with debts outside the plan — similar to fixing only one flat tire while the other stays flat. It’s helpful for some situations, but not a solution for severe delinquency.

💬 Final Thought

Each option has different long-term effects on your credit, your mortgage eligibility, and your financial future. Understanding the differences early can save years of stress and thousands of dollars in lost opportunities.

If you’re facing payment challenges or want to rebuild your credit after insolvency, message The Frontline Mortgage Group and we’ll help you plan the safest next step.