The truth is, your credit is likely so bad that by the time you are considering bankruptcy your credit report likely has many negative marks and has reached a low score.
While having a bankruptcy or proposal on your credit report will result in negative marks for up to 7 years (or 14 years following a second bankruptcy), the fact of having an insolvency on your credit report will not be as negative as the other marks that could be on your credit report that were cleared by going bankrupt or entering into a consumer proposal.
The purpose of the bankruptcy laws is to give a person a fresh start, and while bankruptcy will stay on your credit report for years after your discharge, you can begin rebuilding your credit immediately following your bankruptcy discharge and you can even be approved for the hardest credit (a mortgage) to be approved after 2 years of being discharged from bankruptcy if you work hard and follow our steps to rebuilding your credit.
Canada Credit Reporting Agencies
In all provinces in Canada there are two main credit reporting bureaus Equifax and Trans Union. Both Equifax and Trans Union have their own rules in regards to reporting bankruptcy or consumer proposal information on your credit report.
For Equifax, they purge a bankruptcy from your credit report after six (6) years from the date of the bankruptcy discharge.
Before the record is purged in 6 years the debts will remain on your credit report and marked as “included in bankruptcy.” If a debtor files a second or third bankruptcy Equifax will hold the record of the bankruptcy on your credit report for 14 (fourteen) years from the date of the debtor being discharged from bankruptcy.
Equifax will purge the record of your consumer proposal from your credit score three (3) years following the completion of the consumer proposal (the last payment being made under the terms of the proposal.)
For Trans Union, they state “for as long as your information is relevant to an organization making a decision about an application you have supplied… However, provincial credit reporting legislation outlines maximum reporting lengths for information that is negative.
Therefore, TransUnion will not maintain negative information on your credit file longer than what is permitted by provincial credit reporting legislation.”
This means a bankruptcy will be kept on your credit report for seven (7) years from the date of your discharge. Trans Union will also purge the record of your consumer debt proposal after three years of the last payment being made to successfully complete the proposal.
Rebuilding Credit After Bankruptcy
It is possible to rebuild your credit once your bankruptcy has been completed and you can soon qualify for new credit after your bankruptcy, even with a record of a bankruptcy or proposal on your credit report.
If you have bad credit going bankrupt or making a proposal can help you rebuild your credit score and qualify to borrow money again. For many individuals, a bankruptcy or proposal is the first step in rebuilding their credit and getting a fresh start.
If you have any questions about this or other aspects of bankruptcy or consumer proposals you can set up a FREE consultation with our trustees, who are in every province and territory in Canada.