The problem most people have with bankruptcy is that they just don’t know enough about it. They don’t know what is involved, and more importantly, they don’t know how it ends, or if it ever ends…
The Bankruptcy and Insolvency Act was created to allow the honest, but unfortunate debtor, to obtain a fresh financial start. That’s straight from the government’s description of bankruptcy. It is a method whereby individuals can clear away their debts so that they can rebuild their financial life.
When Does Bankruptcy End?
When a person completes their bankruptcy they are said to be “discharged” from bankruptcy. A discharge can take many forms, but it signals that the procedure is coming to an end. Being discharged from bankruptcy means you are no longer legally responsible for the debts that were included in your bankruptcy. Those debts are no longer your problem. You’ve got your financial fresh start.
What Does Bankruptcy Mean For Your Credit?
The trade off for having a fresh start is that you must build a new credit history. The good and the bad will be cleaned from your credit report as part of the bankruptcy process. There’s no trick to rebuilding your credit –it takes time. The first step is to start filling in the report with new information. That means some new form of credit. If you kept your secured debts out of your bankruptcy (things like a mortgage or car loan) then you will already have some new information (or rather old information that survives the process). If you don’t have a mortgage or car loan then you may be starting from scratch – literally you are back to being a financial kid and you have to prove yourself all over again. There is a process to rebuilding your credit, but it certainly is doable. If it wasn’t, bankruptcy as a debt relief process would not have survived this long. As part of the bankruptcy process, your trustee will provide you with information to help you develop a plan to rebuild your credit.
What About Your Finances?
The biggest advantage of filing for bankruptcy is that, once it is complete, you come out the other side with no unsecured debts (other than a few debts that survive bankruptcy). As part of the process you will receive two mandatory credit counselling sessions. If you take full advantage of the money management and credit management advice included in these you will be better equipped to manage your finances in such a way that you are less likely to ever have to deal with a trustee again in the future.
There is life after bankruptcy, and as many have attested it is a much better position to be in than the one you may be dealing with now. So take the opportunity, get your fresh start.
I like your site but cannot find out why does a creditor show on your credit file when the bankruptcy has been discharged for 6 years.. a first time filing should be gone. how do I approach the creditor and find out why I still have that against my credit as I am looking to buy a house.
You should file a dispute resolution form with the credit bureau and advise them that it is an old debt and should be purged from your credit report.