After Filing Bankruptcy in Canada, How Long Will it be on My Credit Report?
One of the main concerns for people who are thinking about filing for bankruptcy in Canada is how long their credit rating will be affected.
This guide will provide information about what happens to your credit report once you’ve filed for bankruptcy.
After filing bankruptcy in Canada, how long will it be on my credit report?
There are two credit agencies in Canada: Equifax and TransUnion.
The answer to the question varies depending on which credit bureau you’re talking about.
They have slightly different ways of reporting and the duration varies.
- Equifax: if you file for bankruptcy in Canada, according to Equifax, it will stay on your credit report for 6 years following the discharge date or 7 years if there is no discharge. If you file for bankruptcy for a second time, the first bankruptcy will reappear on your credit report and both bankruptcies will remain on the report for 14 years.
- TransUnion: TransUnion applies slightly different rules, which are governed by local provinces. If you go bankrupt, TransUnion will use the maximum time-frame outlined by the relevant province. If you were to file for bankruptcy in Ontario, for example, the bankruptcy would be removed from your credit report after 7 years. A second bankruptcy would increase the duration to 14 years.
It is worth noting that filing a consumer proposal has a different outcome in terms of your credit report.
A consumer proposal cannot be on a credit report for more than 6 years.
The proposal will be removed either 3 years after you have settled all the debts listed in the proposal or 6 years after the proposal was filed.
The earliest date will be used.
Why is a credit report important?
Everybody has a credit rating.
Your credit score is a figure that represents the level of risk you pose to a lender.
If you want to borrow money or you’re keen to take out a mortgage, the higher your credit score, the better the chances of a successful application.
If your credit rating is low, you may struggle to borrow money, and you won’t have access to preferential rates and terms.
Once you go bankrupt, you have a chance to improve your credit rating over the course of time.
According to TransUnion, the average credit score in Canada is around 650.
Over 65s tend to have the highest credit scores.
If you’re considering filing for bankruptcy, you may be worried about the long-term impact.
Depending on the credit agency, your bankruptcy will be removed from your credit report within 6 or 7 years.
If you have any questions about bankruptcy, or you’d like to find out more about consumer proposals, we have a team of experts on hand to provide information and tailored advice.