Will Bankruptcy Ruin My Ability to Get Credit in the Future?

Bankruptcy, a term that triggers fear and anxiety in many, is a remedy for individuals struggling with overwhelming debt. However, the question that often arises is, “Will bankruptcy ruin my ability to get credit in the future?” The answer, fortunately, is not as bleak as most people fear.

Bankruptcy and Credit Score: Understanding the Impact

Before diving into the effects of bankruptcy on your credit score, it’s crucial to understand what a credit score is.

Your credit score is a numeric value that represents your creditworthiness. Lenders use it to determine your risk level when considering lending money. It’s composed of various components, with payment history being the most significant.

If you’re considering bankruptcy, it’s likely that your credit score has already taken a hit due to late or missed payments and debts in collections. Filing for bankruptcy is a chance to wipe the slate clean and start rebuilding your credit score and financial future.

Contrary to popular belief, ignoring your debt will not solve your problems but will instead continue to damage your credit score.

The Effect of Bankruptcy on Your Credit Report

When filing for bankruptcy, a note is included in your credit report. This information comes from the Office of the Superintendent of Bankruptcy, which provides a list of every individual who has filed for bankruptcy or a Consumer Proposal to the credit rating agencies in Canada.

The credit report reflects bankruptcy with an R9 rating, the lowest rating possible, indicating serious delinquency. This rating remains on your report for six years post-discharge for first-time bankruptcy filers. For those filing for the second time, the period extends to 14 years.

Life After Bankruptcy: It’s Not All Doom and Gloom

Despite the negative effects of bankruptcy on your credit report, life goes on, and rebuilding your credit is possible. Your ability to borrow in the future is based on more than just one item on your credit report. Potential lenders will also consider your income, work history, and any other credit you can reestablish.

Here are five steps you can take to rebuild your credit after bankruptcy:

1. Swift Completion of Your Bankruptcy

To start rebuilding your credit, complete your bankruptcy obligations as quickly as possible. Fulfilling your bankruptcy duties, such as making monthly payments and attending credit counseling sessions, will help you wrap up your bankruptcy sooner.

2. Timely Payments

Your payment history significantly impacts your credit score. Therefore, it’s crucial to make all your regular payments on time.

3. Save Money

Saving money can serve multiple purposes after bankruptcy. Not only can your savings be used as a down payment for a home or car, but they can also be used as a security deposit for a secured credit card, which is likely to be your first credit card post-bankruptcy.

4. Maintain Financial Awareness

After completing your bankruptcy, it’s essential to stay on top of your finances. The mandatory credit counseling sessions during bankruptcy will provide you with the knowledge and skills needed to manage your money effectively and avoid future financial pitfalls.

5. Reestablish Credit

Secured credit cards are the easiest form of credit to obtain post-bankruptcy. You can use the savings you’ve accumulated as a deposit for such a card. Remember, it may take you a couple of years or more to qualify for a larger loan, such as a mortgage.

Seek Professional Assistance

If you’re struggling with your finances, don’t hesitate to contact a Licensed Insolvency Trustee. These federally-regulated professionals can assist you with filing for bankruptcy and offer a wide range of debt relief services. In your initial free consultation, they will review your financial situation and advise you on the best debt relief options for you.


Bankruptcy is not the end of the road. Yes, it will impact your credit score and report for a certain period, but with diligent efforts and the right approach, you can rebuild your credit and regain financial stability. Remember, doing nothing is not an option; take action today for a better financial future.

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