Bankruptcy and Credit Scores

When a bankruptcy occurs, a report is recorded on your credit report by the Superintendent of Bankruptcy.

The credit report is sent to the collection agencies each month reporting everyone who has filed for bankruptcy.  This government controls the reporting of bankruptcies not the trustee.

Should anyone check your credit score, the bankruptcy will be visible until it is discharged.

Credit rating and credit reports are kept either by Equifax or Trans Union, two credit rating agencies in Canada.

The rating comes from information about what you owe, credit balances, and payment history.  Credit agencies then assign a score based upon the rating.

• Equifax rates consumers with a scale of R1 to R9, R1 being good, and R9 being poor.
• TransUnion uses a scale from 300 to 900, with 900 being good, and 300 being poor credit risk.

A higher score means a good credit risk, and low scores indicate a poor credit risk to people who lend you money or credit.

Where you file for bankruptcy, the report stays on your credit rating for 6 to 7 years.

It is job of the Office of the Superintendent of Bankruptcy of Canada to notify the ratings agencies of bankruptcies, not the trustee.

Once the bankruptcy has been discharged, you can start rebuilding your credit.

You may think that once the bankruptcy is filed that your debts are cleared, but it’s not that simple.

Payments are stopped, but you are required to make any required payments to the insolvency trustee.  The bankrupt, is still liable for the debts until a discharge is granted by the court.

The bankruptcy discharge, is the last step.  When all of the requirements are completed, the trustee asks the court to discharge you from the bankruptcy.

Discharged from bankruptcy, means that any debt obligations have been released, and you have completed the bankruptcy.

After the bankruptcy is discharged is finished, you can start rebuilding your credit by:

• ensuring that all bills are paid on time
• make a monthly deposit into a savings account, for emergencies and down payments
• obtain a secured credit card with a minimal balance up to 500 dollars

Rebuilding your credit is an ongoing process. You start slow and carefully learning to use credit wisely while increasing your credit rating over time.

Licensed Insolvency Trustee Kelly Dey

Where you have questions about insolvency and bankruptcy, I invite you to call our office to speak to myself or one of our insolvency trustees.

We’re happy to speak over the phone or in-person at one of our offices and are available to answer questions and give you financial advice, without cost or obligation.

Call us today at 905-721-7506.