how does bankruptcy affect your credit

Need another car loan because your old one is out for the count? Too bad. Would you like your bank to help you get back on your feet to buy something for an emergency? Not happening. Ready to start over and move out of your house or apartment? Tough luck.  

While you can lower or rid yourself of current debt, it comes with a price.

Your future stability.

Support will not come easy in the aftermath of bankruptcy. You must weigh the cons and pros before making a heavy choice. 

Will it negatively affect your potential future income? Will it cause issues when trying to find a job? Will it affect your family? 

If you fall, you CAN still get back up and have a fresh financial start by understanding the answer to this question: how does bankruptcy affect your credit.  

How Does Bankruptcy Affect Your Credit: The Long Term Effects 

What your credit score will look post-bankruptcy depends on a few factors: what your score was initially, the type you file for, and the number of debts you had. 

If you started with an incredible 700 and up, you will see a decrease of 200 or more. Those who have 680 and below will see it drop around 130 to 150 points. The higher your credit, the worse the impact may be. 

There is a ton of information online that talks about how to file for bankruptcy. Another countries’ rule is unrelated to Canada’s rules or rights you may have and should not be compared. 

For example, Canadians should be aware that Chapters 7 and 13 only applies to Americans. Canada’s legal system will be either filing for personal bankruptcy or a consumer proposal.

Unlike the US where an insolvency lawyer is hired to help you with the steps, you are to go to a Bankruptcy Trustee’s office in Canada. You must provide them your proof of income every month. 

No lawyer nor the court will get involved unless your case is extreme. The reason for this is to help reduce the fees involved for filing in the first place. 

Any or all investments you may own or could be at risk. This includes having a lien placed on your home or losing your car. Keeping what you can is the goal the Trustee will try to provide you with. 

Once you’re legally bankrupt in Canada, the stain will appear on your report for 6 years, and up to 14 years for those who filed for more than one. 

How You Can Fix Your Score Following Bankruptcy

Polishing up your credit will involve a few proactive steps with the most important thing being to spend less than you make. After all, there is nothing worse than repeating the same mistake.

At the same time, you want to save any income you make for emergencies that may occur or for anything else.

Tracking the money you make and knowing what it will go towards is helpful. The visual can make you realize where your money is going, and you are less likely to make mindless purchases. 

Keep in mind that Canadians must pay a base contribution (of about $200) each month. 

If you make more than the minimum surplus income as defined by law, you will also be making a separate payment towards this. 

You also must give up your tax refund, including those in the past you didn’t yet receive.   

Ensuring that you are punctual with your bills will reflect that you are being responsible for things such as your mortgage or credit card.

They are reported to the credit bureaus on a monthly basis and any late fees may not only hurt your credit score, you’d be charged with more money you don’t even have.  

Speaking of credit cards, it is best to get this toward the end when once you are more stable if you still have a spending problem. Those that can use a credit card should pay back the money they do spend — 100% of it.

Having a credit card can be done at any point in time though so long as you have the funds to receive a secured version where you use your own money. 

Slowly but surely, following these plans will help raise your credit score. 

What to Do When You Need a Loan 

Wouldn’t it be nice to have a smooth road to fixing your credit score? Unfortunately, the road to get there may be a long, rocky road. 

Life happens and you may not always have the money you need to reach the financial stability you have been searching for. 

So how does bankruptcy affect your credit? In the event that you or an immediate family member must go to the hospital or you find yourself in a bind, you will need cash and experience trouble getting approved. 

Filing for bankruptcy will make finding a lender to help you pretty hard, but that doesn’t mean there’s no way. 

Before you decide to take out a loan, you should seek less costly alternatives. Are you sure you need it or can the situation be done at a later time? If you are certain you need to borrow money, then try to ask other family and friends for help first. 

If you are in Canada and exhausted these options you can get a cash loan online quickly and safely by contacting us.

Providing those with no credit or bad credit is one of our many priorities. Everyone deserves a chance especially during bad times after a bad time. 

Getting a loan from a traditional bank hard due to their strict requirements. The time it takes to get the approval is also long which doesn’t work for those who need funds as quickly as possible. 

Despite filing for bankruptcy, you can explore various options to pay back your loan after deciding how much you need online or over the phone. 

Did you know over 100,000 Canadians declare bankruptcy annually? We have many satisfied customers who receive a loan from us during times of struggle. We would like to help you too whenever you need it.