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Will I be able to get credit again after bankruptcy? How long will it take?

By Norma Yau, Trustee

You know that you are having financial problems, and you have decided to call a bankruptcy trustee and you are pretty sure that you are going to file for personal bankruptcy. There is just one more question you want to ask:

?How long will it take for me to be able to get credit again?? The fact that you have filed bankruptcy will be noted on your credit report and will remain there for a minimum of six years after you have been discharged from bankruptcy. If it is your first bankruptcy, you will be eligible for an automatic discharge nine months after you file, if certain conditions are met and all of your duties are completed. At the point of discharge your debts are cleared and you have no more obligations to your creditors or to the bankruptcy trustee who was administering the estate. It will be six years from this point that the mark will remain on your credit report.

If you would like to do something to get out of debt that might be less damaging to your credit rating, you could consider a consumer proposal.  In a consumer proposal you offer a deal to your creditors to pay back some, but not necessarily all, of what you owe over a period of up to five years. A proposal will be noted on your credit report for three years after you are done making the payments, so if the proposal takes four years to complete, it will be on your credit report for about the same length of time as a bankruptcy.

It is also important to consider  whether you really want to be seeking credit soon after your bankruptcy or proposal. A lot of people tell me that they need a credit card because they cannot save money, but this is the wrong reason to get a credit card. I always tell people if they are unable to save at least $100 a month, getting credit is not a good idea for them. Credit cards make it too easy for people to spend beyond their means. You need to make sure you know how to manage your finances so that you do not end up in debt again.

If you would like to learn more about filing bankruptcy or a consumer proposal and how these will affect your credit report, contact a bankruptcy trustee from Hoyes, Michalos & Associates by calling 310-PLAN, or by sending us an e-mail or completing our no obligation bankruptcy evaluation form,  and one of our professionals will be happy to speak with you, answer your questions and set up an appointment at one of our Ontario offices near you. Failing to make the payments on your debt is not going to help your credit report either, so let us help you create a plan to get rid of your debt and have a fresh start!

Full post as published by Hoyes Michalos and Associates Ontario Personal Bankruptcy Blog on May 11, 2009 (boomark / email).