Life After Bankruptcy
What Happens After I am Discharged From Bankruptcy?
When you have completed all the bankruptcy requirements that are necessary for you, you will obtain your automatic bankruptcy discharge which means you can begin your life after bankruptcy.
This bankruptcy discharge is the official certification that you have completed your bankruptcy and that you have been released of the legal obligation to repay the debts included in your bankruptcy paperwork.
Now that you have been discharged from your bankruptcy you have a fresh start and you can begin rebuilding your credit and a solid financial base. While you can rebuild your credit and are now out of bankruptcy you must always tell any credit grantors you are seeking new credit from that you were bankrupt in the past; you must answer yes but if you have worked to rebuild your credit this record of your bankruptcy won’t impact your credit or ability to gain the credit you are requesting. A record of your bankruptcy will remain on your credit report for 6, 7 or 14 years depending on whether you have been bankrupt more than once and which credit bureau is reporting on your credit (Equifax and Trans Union).
After you receive your discharge your credit report will be clear (except for the record of your bankruptcy) as if you have never have had credit before. You will have to begin rebuilding a good credit history. With the tips you will receive from the Trustee, you will have the knowledge to rebuild your credit report and credit score, which allows you to be approved form a larger credit loan at lower interest rates, which means you can save many hundreds or thousands of dollars in interest charges over the life of the loan or on your credit cards another indefinite credit.
Getting Credit After Bankruptcy
While you will have trouble getting credit immediately following your discharge from bankruptcy, you will be able to begin rebuilding your credit score and credit report.
Like a young adult you will have to build up a good credit history. Your LIT (Licensed Insolvency Trustee) will provide you with the necessary financial knowledge to rebuild a good credit score.
If you go bankrupt your credit score will likely be as poor as it can get, and if this is the case then bankruptcy can actually give you the best chance to improve your credit score.
The fact that you have filed bankruptcy will be a part of your credit report for 6 years from the date of the discharge although you can rebuild a good credit score in as little as two years by following the tips that your Trustee will provide you. You can begin rebuilding your credit as soon as you have been discharged.
How Can I Rebuild My Credit Following My Discharge?
Generally, the best thing you can do to begin rebuilding your credit is to clear any errors on your credit report. Your credit report is prepared by a human and errors are possible. Checking your credit report from both Equifax and Trans Union and clearing any inaccurate marks on your report will give you the easiest and fastest way to start rebuilding your credit.
Another good tip for rebuilding credit following bankruptcy is to apply for a secured credit card. A “secured credit card” allows you to have revolving credit. With a secure credit card, you will “secure” the available credit with a deposit with the company offering you the secured card.
In order to receive a secured credit card you must give a certain amount of money as a security deposit.
Once you have your secured credit card you should use it to make small monthly charges each month. As you have secured the credit you won’t be able to get into further debt and each charge will be covered which mean you will start building a good credit history. This will help your credit score improve in as little as 6 months.
Another way to rebuild your credit score is to apply for a loan and use the funds for an RRSP which will be deposited into your RSP account, which you will access when the loan is over, usually after 12 months.
If you decide to apply for a vehicle loan following your bankruptcy it is important that you examine all of the costs involved with borrowing for a car, especially if you approach one of those companies that offer car loans to individuals with poor credit. Using a secured credit card for some time – say 6 months – before applying for a vehicle loan can help you get a loan at more affordable terms and make it easier to be approved.
Going bankrupt should be considered a last resort for people who simply cannot afford to service their debt obligations to their creditors, although bankruptcy will not be the end of your credit score for life or that you will never be able to rebuild a good credit score; in fact, filing for bankruptcy can often give you the fresh start you need to begin rebuilding a good credit score.
The main tenement of the bankruptcy laws in Canada is that you can get a fresh start – and this includes the ability to rebuild a good credit score and credit history.
These tips will help you begin rebuilding your credit, although you must follow the tips diligently if you are serious about rebuilding your credit score.
Are you Interested in Learning More?
If you are considering bankruptcy or a proposal to your creditors as a way of dealing with your debt we are glad you have found this page which can help you understand about how to rebuild your credit following your bankruptcy or proposal. We advise you to research as many pages as you can on this site so you can have a full understanding of how bankruptcy or a proposal will impact you and how either insolvency option can help you get a fresh financial start, which will allow you to begin rebuilding a good credit report, and therefore improving your credit score.
Our Licensed Insolvency Trustees will provide you with a free consultation when you are ready to learn more or speak about your situation with a professional who can help you find the best solution to your debt problems.