Should I Be Concerned About My Credit Rating if I’m Filing Bankruptcy?
I learned early in my career, as a Licensed Insolvency Trustee, that most people were obsessed with their “good credit rating”.
Probably the most common comment I got from a person contemplating bankruptcy or a consumer proposal was that they were reluctant to file because it would destroy their credit rating.
Should I Be Concerned About My Credit Rating? I would gently point out that a bankruptcy or a consumer proposal would not make their credit rating worse, because their credit rating was so bad to start with.
I would gently point out that a bankruptcy or a consumer proposal would not make their credit rating worse, because their credit rating was so bad to start with.
I would explain that although the record of their bankruptcy would stay on their credit report for 6 years after their discharge from bankruptcy (For a consumer proposal it would be 3 years after the satisfaction of the consumer proposal), they would be able to rebuild their credit rating within 2 years after their discharge.
In many cases a bankruptcy or consumer proposal would actually improve their credit rating because when they were discharged all their debt was erased so they were, in fact, a better credit risk after filing than before.
Paying interest only to preserve a “good” credit rating is a strategy many people use.
This is quite common with the person carrying on this strategy for months or years, while their debt accumulates with no resolution in sight for a solution to their debt crisis.
So long as this strategy is used there is no possibility that the person can save for their future. They are just a slave to the false God of a good credit rating.