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Credit Repair after Bankruptcy

I live in Canada, how can I repair my credit after my bankruptcy?

After your bankruptcy is completed, credit repair in Canada can be achieved most quickly if you follow this six step plan:

  1. Complete your bankruptcy in the shortest time you can. In Canada, if you were never previously bankrupt, you can qualify for an automatic discharge from bankruptcy in nine months. To be discharged this quickly, you have to make monthly payments and reports to your trustee and attend your credit counselling sessions. The sooner your bankruptcy is completed, the sooner it will disappear from your credit report, so complete all of your bankruptcy duties as soon as possible.
  2. Start saving money. It is a simple fact of life in Canada: Banks lend money to people who don’t need it, not to people who urgently require cash. To borrow again, you need to prove that you can handle money, and the best way to do that is to show that you have some savings. You probably were making monthly payments to the trustee during your bankruptcy. Now that your bankruptcy is finished, continue making those payments, but make them to your own savings account. Savings will be the foundation for your future borrowing.
  3. Get a copy of your credit report. Go to Equifax, and Trans Union the two largest credit bureaus in Canada, and get a copy of your credit report. Check it for errors. If you find any, such as debts appearing that were included in your bankruptcy, notify the credit bureau immediately.
  4. Get a secured Visa card. Start rebuilding your credit with a secured Visa card. You use your savings to place a deposit with Visa; they give you a credit card with a similar credit limit. It shows up on your credit report as a normal credit card, and now you have a credit card for use when required. Click here for more information.
  5. Get an RRSP. Use more of your savings to put money in an RRSP. If you invest $1,000 in an RRSP, the bank will probably be willing to lend you another $1,000 to contribute to your RRSP. That $2,000 you contribute will generate a refund at tax time that will be almost enough to pay off your loan. Your credit report now shows a paid off loan, which looks great on your credit report, and you have $2,000 invested in an RRSP.
  6. Keep saving. You will soon have enough for a down payment on a car, and if you save long enough, the down payment on a house.

For a more detailed discussion, go to How can I rebuild my credit in Canada after a bad credit rating?

For more on life after bankruptcy or a consumer proposal, see How can I get back to normal?

In Canada, credit repair after bankruptcy is possible. It may take a year or two of frugal living, but by saving money you can gradually regain the ability to borrow. Use it wisely!

If you feel you don’t have any more options, contact a local licensed Trustee. We have trustees everywhere from Edmonton to Ottawa and more. You can get your questions answered today.