Life After Bankruptcy

Crowe Soberman Insolvency Team
| 7/19/2016
Life After Bankruptcy

For many individuals, they are unclear about if, and when, they are able to apply for and receive credit after they have filed for personal bankruptcy.

Once an individual is discharged from their bankruptcy, they are able to begin the process of rebuilding their credit rating and apply for credit. Many individuals don’t realize that even while they were in bankruptcy, they may have been taking positive steps to improving their credit rating by paying their monthly phone and hydro bills consistently and on time.

After bankruptcy, it may be challenging for you to get access to new credit again, depending on the provider. We recommend that you check your own credit information roughly one month after you receive your discharge to ensure that your history is accurately reflected. Individuals should make sure that they understand their credit report, and take any needed steps to get it updated and correct. Your bankruptcy filing, if it is a first bankruptcy, will be recorded on your credit history for six years from when you received your discharge. If the bankruptcy is filed for a second or third time, the filings will be recorded on your credit report for up to 14 years.

Your best strategy during this period after being discharged is to manage your financial affairs wisely. Individuals should be paying close attention and keeping track of their monthly income and expenses, tweaking their spending in order to maintain a positive cash flow. We strongly encourage maintaining a written record of all expenses in order to assess expenditures on a monthly basis and facilitate future savings.

Similarly, if you want a new secured loan, for a car or house, the lender will be mostly interested in your having a steady income to support the payments, and the security you can offer.

Even while the bankruptcy still shows on your credit report, you can start to get unsecured credit again, if you follow a careful process to gradually repair your credit. It is important that individuals understand that being granted credit is a privilege not a right, your credit worthiness depends on how you manage your affairs after getting your “fresh start”. Individuals should be careful to not apply for too much new credit once they are discharged, as every time you do there will be a notation on your credit report. If you are declined once or twice at the beginning it is better to wait for at least six months and continue watching your budget and saving.

Financial problems are, unfortunately, a reality for a growing number of individuals in Ontario. Our personal bankruptcy and insolvency specialists work to help you with today’s ever-changing and complex debtor/creditor and asset protection laws and regulations. Contact us to find out how we can help.

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Hans Rizarri
Hans Rizarri
Partner, Corporate Recovery & Turnaround