If You Use A Company Credit Card
If the statement goes directly to your employer and your employer is responsible for payments, you should be able to keep your company credit card after bankruptcy. However, if youve used the card for personal purchases or are liable for the balance, its more likely your company will be notified and take action.
If youre not sure about liability, talk to your human resources department and your attorney.
Why You May Want To Avoid Filing Bankruptcy In Canada
Not since the recession of 2008 has our country been in such dire financial straits. Even before the pressures of the COVID outbreak, many people were struggling financially and had to consider whether they should file bankruptcy proceedings.
According to the Toronto Star, Canadians are filing for insolvency in record numbers, with the Government of Canada revealing that insolvencies totaled 35,155 in the final three months of 2019, the most in any one quarter since 2010. And thats not all. According to one study, 46% of Canadians are within $200 of facing insolvency every month, up from 40% in the previous quarter.
While it may seem like everyone is filing for bankruptcy, that doesnt mean you should, too. There are a few reasons why not to file bankruptcy such as the way it can impact your future employment opportunities and credit score.
Fortunately, there are other options available to you before you decide to take that kind of a financial plunge. In this blog, we offer some information about the consequences of filing bankruptcy and some alternative debt relief options.
Can I Get A Credit Card If I Declare Bankruptcy In Canada
No. Once you file for bankruptcy, you must hand over your credit cards to your trustee so they can be cancelled. Additionally, your credit rating will be negatively affected by your bankruptcy and Canadian credit bureaus will keep a note about your bankruptcy on your credit report for up to 7 years, depending on your province.
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How Does A Low Credit Score Affect Me
You may think that your credit rating is a theoretical number that has no impact on your everyday lifebut that’s not quite true. Lenders and other creditors use your credit score to determine your creditworthiness. The lower your score, the less likely you are to obtain credit, which could be anything from a store credit card to a personal loan or mortgage. It may even hurt your ability to obtain a job if your potential employer seeks permission to check your credit file.
You Have Other Options Available Bankruptcy Alternatives
Bankruptcy may not be the only way out of your financial nightmare. Depending on your financial situation, you could be better off in the long run with alternatives, such as a:
Debt Consolidation Loan
The first option to look at to improve your debt situation is often a debt consolidation loan. Consolidation loans are usually used to pay off high interest consumer debts. The end result is a single monthly payment thats easier to focus on.
One objective when pursuing credit card debt is to lower your interest rate. This can be done when youre consolidating credit card debts through a bank or credit union loan. However, if you dont qualify for a loan at one of these places, then interest rates are often quite a bit higher at a finance company.
The one problem many people encounter when looking for a consolidation loan is getting approved. A bank may want some sort of security for the loan such as a vehicle or real estate.
If you can get a loan, it can actually help improve your credit score if the loan pays off a bunch of maxed out credit cards. Having to make only one payment each month also makes it easier to stay on top of your finances. And if you automate your payments, you wont have to worry about falling behind on this loan payment.
With a consumer proposal, the creditors that hold the majority of your debt need to agree to the proposed terms, and once they do, you are obligated to repay the agreed amount over a maximum of 5 years.
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Contact A Licensed Insolvency Trustee
Once you realize that you are in financial trouble, its important to find a bankruptcy team that will look out for your best interest. This means finding a licensed insolvency trustee to represent you throughout the process. A LIT is an officer of the court and is the only professional authorized to administer government-related insolvency proceedings that can discharge you from your debts. The trustee will represent a balance of interests between you and your creditors, helping to reach a resolution that both sides are happy with. They will help to assess your situation and give advice about the bankruptcy process while ensuring your rights and the rights of the creditors are respected.
Know When Not To Declare Bankruptcy
Bankruptcy may seem like an easy way out, a way to get a do-over, however, a bankruptcy is only beneficial for a very small amount of people. It isn’t always the best option, and it might not be the right one for you. Before doing anything, double check that none of these 5 reasons to not consider bankruptcy apply to you.
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What Happens To Your Credit Report When You File Bankruptcy
Whenever certain financial things happen in your life, the credit bureau is usually notified.
A typical example of this is when you apply for money the bureau becomes aware of this and gets added to your credit report.
The same happens when you file bankruptcy.
The credit bureau is notified of this by the Office of the Superintendent of Bankruptcy Canada.
All of the creditors you owed money will also inform the bureau if your debts to them were included in the bankruptcy.
Both of these have an impact, but for different reasons.
Firstly, notifying the credit bureau of bankruptcy allows them to add this to your report.
Secondly, creditors informing the bureau of your debts allows them to remove the debts from your report.
This can be important when it comes to rebuilding your credit.
Are Bankruptcy Filings Publicly Available
Bankruptcies are considered a public record, but that doesn’t mean everyone’s going to know about it. Bankruptcy proceedings are filed in a system called Public Access to Court Electronic Records, or PACER for short.
For the most part, it’s more common for attorneys and creditors to use this system to look up information about your bankruptcy. But anyone can register and check if they want to. The service charges 10 cents per page to access case information.
Another way people might find out about your bankruptcy is if your local newspaper publishes public notices.
Finally, employers, landlords and creditors may be able to see on your credit report that you’ve filed bankruptcy when you apply for a job, an apartment lease, or a loan or credit card.
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Myth #: You Can Only Check Your Credit Score For Free Once A Year
You can actually pull your credit report from each credit bureau once per year for free by mail or phone. This only gives you access to the debts that are listed on your report and their ratings. Getting your credit score requires paying an additional fee. Services such as and Borrowell provide free access to your credit score, drawing on information from the credit bureaus, and provide a good ballpark idea of what your score is. However, it should be noted that these third-party services dont always provide the full picture and can sometimes worry Albertans for no reason. The most reliable way to know your score is by ordering it from the credit bureaus directly.
How Long Does Bankruptcy Affect Me
There sure is a lot of misinformation out there about bankruptcy, how long it lasts and what the long term effects are. Just when I think I have heard it all, someone comes up with a new one, I heard you cant have a bank account for 10 years when youre bankrupt A person said that to me just last week.
So, how long does a bankruptcy affect you? There are three answers to that question:
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What Is A Credit Rating
Your credit rating is derived from your credit file, which contains information about your credit balances, limits, and payment history , as well as personal details such as your occupation and employment history.
Canada’s largest credit bureau, Equifax, uses a simplified scale of R1 to R9R1 being a perfect scorewhile TransUnion measures credit scores on a scale of 300 to 900, with 650 generally considered to be the dividing line between good credit and poor credit. Declaring bankruptcy will likely reduce your credit rating to the lowest level.
Applying For Credit After Bankruptcy
As it can be difficult to get credit after filing bankruptcy, your personal relationship with a lender can be crucial. Having employees or management at a bank, a , or an auto lender who know, trust, and like you makes it easier to get an application accepted.
You rebuild credit after bankruptcy the same way that you build credit before one: with time and a consistent repayment history. If you believe you can continue to repay a preexisting debt during and after bankruptcy, consider a reaffirmation agreement with one of your creditors to help the process of rebuilding your credit score.
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Mistakes On Credit Reports After Completion Of A Consumer Proposal
Unfortunately, it is not uncommon to find mistakes on your credit report after youve completed the consumer proposal. Its advisable to get the inaccuracies resolved as soon as you can, so your credit report reflects the correct and most updated picture. After all, upon completion of a consumer proposal, youre looking forward to a fresh and optimistic start and rebuilding your credit. Both Equifax and Transunion have processes in place to correct erroneous information on your credit report in Canada.
So be sure to examine your credit reports and check whether creditors are reporting any previously owed figures as fulfilled or still pending. If you find any discrepancies, you can initiate a rectification by submitting a correction request to Equifax or TransUnion . The request must include a completed Credit Investigation Request Form along with any pertaining documents as evidence to substantiate your request.
What Is A Credit Report
Your is created the first time you apply for credit or borrow money. It will contain information such as details about your credit cards and loans, including when you opened your accounts, how much you owe, when you make or miss payments, and if you go over your credit limit. A credit report also contains personal information such as if you have ever filed for bankruptcy.
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Part Ivproperty Of The Bankrupt
and for the purpose of this subsection, any provision of a law of a province that creates a deemed trust is, notwithstanding any Act of Canada or of a province or any other law, deemed to have the same effect and scope against any creditor, however secured, as the corresponding federal provision.
- R.S., 1985, c. B-3, s. 67
- 1992, c. 27, s. 33
- 1996, c. 23, s. 168
- 1997, c. 12, s. 59
- 1998, c. 19, s. 250
- 2005, c. 47, s. 57
- 2007, c. 36, s. 32
68 The Superintendent shall, by directive, establish in respect of the provinces or one or more bankruptcy districts or parts of bankruptcy districts, the standards for determining the surplus income of an individual bankrupt and the amount that a bankrupt who has surplus income is required to pay to the estate of the bankrupt.
A mediation shall be in accordance with prescribed procedures.
Documents contained in a file on the mediation of a matter under this section form part of the records referred to in subsection 11.1.
The trustee may, in any of the following circumstances â and shall apply if requested to do so by the official receiver in the circumstances referred to in paragraph â apply to the court to fix, by order, in accordance with the applicable standards, and having regard to the personal and family situation of the bankrupt, the amount that the bankrupt is required to pay to the estate of the bankrupt:
The court may fix an amount that is fair and reasonable
What Can You Do To Avoid This
Although a joint debt cannot be eliminated by a divorce or separation agreement, there are options available for dealing with the joint debt a spouse may be responsible for when the other spouse files for bankruptcy:
the spouse left with the debt can file for bankruptcy
the spouse left with the debt can file a consumer proposal
both spouses can file a joint bankruptcy or joint consumer proposal
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How To File For Bankruptcy In Ontario
Securing your debt-free future starts with finding the right Licensed Insolvency Trustee. At Doyle Salewski, we offer a free and comprehensive consultation on your finances, so that we can come to the table with ideas the moment you retain us.
As your trustee, we will explain to you your responsibilities, while providing you with a clear picture of how the bankruptcy process will free you from unmanageable debt.
Contact us today to speak with the bankruptcy advisors Ontario and Quebec residents trust to find their bankruptcy solution.
What About Bankruptcy Crimes
The usual reason why a bankruptcy hurts someones immigration case is because the immigrant committed a bankruptcy crime.
Bankruptcy crimes are things like:
- Lying under oath
- Supplying false financial statements
- Omitting essential information or assets from your bankruptcy papers
Simply filing for bankruptcy because you have too much debt is not a bankruptcy crime, and so is not a basis to deny an immigration petition.
Bankruptcy crimes are very rare, however, and a good bankruptcy lawyer will make sure that you dont commit them.
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What Are The Requirements Of Filing Bankruptcy
Who can file for bankruptcy?
The criteria for being able to file bankruptcy is simple:
- You must owe at least $1,000
- You cant make your payments as they come due and,
- You dont have sufficient assets to pay off your debt.
What kind of debt can I discharge with bankruptcy?
Bankruptcy relieves most kinds of unsecured debt, whether thats credit card debt, payday loans, tax debt, bank loans, or a line of credit.
Debts that are not dischargeable by bankruptcy include:
- Court imposed fines, penalties, and restitution orders
- Speeding tickets and parking tickets
- Child support, spousal support, or alimony
- Debts created by fraud
- Civil court damages awarded against you
- Student loans for studies within the last 7 years
Can I file for bankruptcy if I live abroad?
If youre a Canadian citizen living internationally but have debts in Canada, the simplest way to file for bankruptcy is to return to Canada and give a trustee your bankruptcy paperwork.
If you prefer to stay outside of Canada, you can file for bankruptcy if:
- Youve carried on business in Canada within the year preceding bankruptcy
- You have resided for the previous 12 months in Canada or
- The majority of your property is located in Canada .
For more tips on filing for bankruptcy while living outside of Canada, read our blog.
Is Bankruptcy Right For Me
The first question you need to ask yourself, therefore, is, do I need to declare bankruptcy or is there a better option for me? Make sure you know what you’re getting into. It’s important that you understand whether it’s the best option for you, your family and your collective financial future. Declaring bankruptcy, while the only option for some, may be a knee-jerk reaction for others, without first exploring other options.
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Myth #: Checking Your Credit Score Will Negatively Affect It
This ones tricky! According to Equifax, While pulling your own credit report does result in a soft inquiry on your credit reports, it will not affect your credit scores. In fact, knowing what information is in your credit reports and checking them regularly may help you get in the habit of monitoring your financial accounts. On the other hand, hard inquiries do affect a credit score. The Equifax website says, When a lender or company makes a request to review your credit reports as part of the loan application process, that request is recorded on your credit reports as a hard inquiry, and it usually will impact your credit scores. The reason for this is that the credit bureaus regard multiple credit inquiries in a short period of time as increasing the likelihood that a borrower is carrying a lot of debt. Borrowers who carry a lot of debt are seen as risky in terms of their ability to repay the debt. Credit bureaus identify those potentially risky borrowers by lowering their credit score. Having said that, most people can have their credit report pulled three or four times per year without negatively affecting their credit score. An exception to the above practice is when you are shopping around for a major purchase like a car or mortgage. Again, according to Equifax, multiple inquires for the same purpose within a certain period of time are generally counted as one inquiry.