Myth #5: I’ll Never Get Credit After Bankruptcy

Category: Personal Bankruptcy

Many people are concerned that if they file for bankruptcy they will ruin their credit forever and never be able to apply for a loan or any form of credit after bankruptcy.

Myths: My credit will be ruined. I will never be able to apply for credit after filing bankruptcy.

Truth: Bankruptcy is a negative mark on your credit score however not dealing with your debts is worse in the long run. Filing bankruptcy gets rid of overwhelming debt, putting you in better financial shape for the future.

A bankruptcy notation will appear on your credit report for a period of time after you file for bankruptcy. Exactly how long a bankruptcy stays on your credit report in Canada depends on the reporting agency but generally for a first time bankruptcy a note will remain on your credit record for 6 to 7 years after your discharge. In contrast, a consumer proposal remains on your credit report for 3 years after you successfully completed your proposal.

While a bankruptcy notation will not look good on your credit file, not paying your debts is what causes bad credit. If you are constantly behind on paying your bills, if you are receiving calls from collection agencies or your wages are being garnished, then your credit rating is already ruined. Deciding to file for bankruptcy starts the process of repairing your credit for the future.

Rebuilding your credit is something you can start right away.  During your bankruptcy, start by keeping track of your expenses. If you learn to manage your finances better during your bankruptcy, you will be able to rebuild your credit that much faster after your bankruptcy is completed.

After your discharge, you can aggressively begin the process to repair your credit. You can still obtain a credit card after bankruptcy but be careful – don’t return to you old spending habits. Rebuild your credit – not your debt.

Read about other common bankruptcy myths:

Myth #1: Everyone Will Know I Filed Bankruptcy?
Myth #2: Will I Lose Everything If I Declare Bankruptcy?
Myth #3: A Bankruptcy Trustee Only Does Bankruptcies
Myth #4: All My Debts Are Discharged In A Bankruptcy

Category: Personal Bankruptcy |

About Howard Hayes

Howard Hayes is a Licensed Insolvency Trustee and Consumer Proposal Administrator with Hoyes, Michalos & Associates Inc. in Cambridge and Brantford, Ontario. Howard has many years of experience helping clients deal with their debts and is happy to review all of your debt relief options.