What Are The Consequences For A Bankrupt Of Not Being Discharged
Not being discharged has important consequences for a bankrupt.
A person who is bankrupt may not borrow more than $1,000 without informing the lender that he/she is bankrupt. Failure to do so is an offence under the BIA that is liable to a fine, imprisonment or both.
Information pertaining to bankruptcy remains on an individual’s credit file for 6-7 years following discharge of a first-time bankrupt. Times may vary across provinces/territories.
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What Debts Are Not Discharged In Bankruptcy
Debts that are non-dischargeable are debts that cannot be resolved or discharged through your bankruptcy.
While bankruptcy can clear most of your debts, it doesnt eliminate all of your debts.
Debts not eliminated in a bankruptcy include:
- Court imposed fines, such as parking tickets and traffic fines
- Debts arising from fraudulent transactions
- Student loans unless you have been out of school for more than 7 years
- Gambling debts.
How Do I Find Out The Official Date Of My Discharge Order
Your order of discharge will have a date on the form that is the official date of discharge. When you receive your bankruptcy order, keep it in a secure place. If you have a paper copy, you could store it with your other documents that have important dates, like your bankruptcy petition, car insurance, retirement plan, and mortgage documents. If you have a digital copy, make sure access is secure. You may be asked to present a copy of the order while youâre trying to reestablish your credit, or in other circumstances where a credit check is required. If you file bankruptcy in the future, youâll need to know the date you filed the petition for your more recent bankruptcy.
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Do You Have Surplus Income
If your monthly income is $200 or more in excess of the current surplus income limit set by the government, it is possible that your bankruptcy will be extended for longer than nine months, and you will be required to pay a portion of this income into your bankruptcy.
It is not wrong to make surplus income, but it is only fair that a portion of it be paid to your creditors. Having surplus income also lengthens the period you are bankrupt usually to twenty-one months for first-time bankruptcies.
For more information, see our page on surplus income.
How Can The Debtor Obtain Another Copy Of The Discharge Order
If the debtor loses or misplaces the discharge order, another copy can be obtained by contacting the clerk of the bankruptcy court that entered the order. The clerk will charge a fee for searching the court records and there will be additional fees for making and certifying copies. If the case has been closed and archived there will also be a retrieval fee, and obtaining the copy will take longer.
The discharge order may be available electronically. The PACER system provides the public with electronic access to selected case information through a personal computer located in many clerk’s offices. The debtor can also access PACER. Users must set up an account to acquire access to PACER, and must pay a per-page fee to download and copy documents filed electronically.
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How Long Does This Take
A first time bankrupt, who does not have to pay surplus income, is eligible for an automatic discharge in 9 months. If you are subject to the surplus income penalty, you will be required to make surplus income payments for 21 months. Longer bankruptcy times apply to second and third bankruptcies.
Failure to complete your duties in this time period means it will take longer for you to receive your discharge from bankruptcy.
It is also possible for a creditor, the Superintendent of Bankruptcy, or your trustee to oppose your bankruptcy discharge.
The Court Can Deny Or Revoke A Discharge
If you fail to cooperate with the court or the trustee, are not truthful on the paperwork or in your testimony, fail to turn over assets, or are otherwise undeserving of a discharge, the court can deny your discharge. Likewise, if the court learns that you committed some act that would have caused the court to deny your discharge, the court can revoke it.
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Bankruptcy Discharged: Types Of Bankruptcy Discharge
The licensed insolvency trustee can usually issue an automatic discharge when there is no trustee in bankruptcy opposition or to a bankrupts application for discharge, and the bankrupt has fulfilled all of their duties during bankruptcy.
In case of opposition or if the bankrupt meets one of the criteria that prevents automatic discharge , a discharge hearing in court is held, which is conducted by the Master of the Bankruptcy Court. There are four types of the bankruptcy discharge and a fifth outcome is also possible. Here they are:
Traditional Or Prime Insured Mortgage:
To qualify for a traditional mortgage, which may give you the best rate, you must meet the following requirements:
- have been discharged from bankruptcy for at least two years and one day
- have at least one year of re-established credit showing on two credit items usually with a minimum combined credit amount of between $2,500-$3,000
- have a minimum down payment of 5% for the first $500,000 of your purchase, 10% for any amount over $500,000
- if your down payment is less then 20% down you must have mortgage insurance available through Canada Mortgage and Housing Corporation
- your minimum LTV is 95%
- your maximum TDS is 44%
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What To Do After Your Bankruptcy Is Discharged
Once your bankruptcy is discharged, you should pull your credit reports from Equifax, Experian and TransUnion to confirm that your lenders are accurately reporting the discharge. Only the debts included in the bankruptcy filing should be reported as discharged. Also, double-check that all of those accounts included in the bankruptcy show a zero balance on your credit reports. After youve confirmed that your credit reports are accurate, you can then consider applying for a new credit card.
Even after your bankruptcy is discharged, it may take a while to qualify for a new credit card. Some credit card companies may reject your application simply because you have a recent bankruptcy on your credit report. Others may be less stringent because your risk of filing for bankruptcy again is low, since there are rules restricting when you can file for a second bankruptcy.
Period Applicable Until Discharge
The bankrupt may apply to court at any time for discharge from bankruptcy , and the court may grant it, either fully or conditionally.
In the case of first-time or second-time bankrupts, discharge occurs automatically as follows:
Automatically discharged
| Type of bankrupt |
|---|
| Yes |
The following debts are not released on discharge:
- any fine, penalty, or restitution order imposed by a court in respect of an offence, or any debt arising out of a recognizance or bail
- any award of damages by a court in civil proceedings in respect of
- bodily harm intentionally inflicted, or sexual assault, or
- wrongful death resulting therefrom
In the case of student loans, the seven-year period noted above, on application to the court, may be reduced to five years, if the court is satisfied:
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Consider An Fha Mortgage
In order to finance a house in Colorado Springs after a bankruptcy, you may also need to consider other mortgage loan options. There are several good reasons why you should consider an FHA mortgage.
Industry pros explain: The FHA understands that the recent economic downfall has created hardships for many Americans, and is therefore rather forgiving of bankruptcies in your credit history. If you can qualify for an FHA loan, this may be your best method of securing affordable home financing in a timely manner.
The main thing to keep in mind is that financing a house in Colorado Springs after a bankruptcy is in fact possible a lot of people have done it. You just have to take the necessary steps and prove to lenders that youre a good risk. There are in fact many more things you can do than weve listed here. Contact your local real estate agent to discover more.
To find out how our qualified agents can help with financing a house in Colorado Springs, just give us a call at 900-4446 or send us a message.
If you’re looking to buy or sell a property connect with us today!
Disadvantages Of A Bankruptcy Discharge
Your bankruptcy protection doesn’t extend to joint account holders or cosigners on any of your debt obligations. Your personal liability for the debt is removed when you receive your bankruptcy discharge, but your cosigner remains on the hook for the entire balance of the debt. Creditors can still collect fromor even suecosigners and joint account holders for discharged debts.
You can voluntarily make payments on a debt to ensure that it’s paid in full.
Your bankruptcy discharge will additional appear on your and affect your credit score for seven years after you file for Chapter 13 protection, and for 10 years from the date you file for Chapter 7 bankruptcy.
Accounts associated with your bankruptcy might be deleted from your credit report if the date of delinquency preceded your bankruptcy filing.
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How Long Do Bankruptcies Stay On Your Credit Report
The length of time that a bankruptcy filing stays on your credit report depends on what type of bankruptcy you filed. We took a look at Chapter 7 and Chapter 13, which are the two main types of consumer bankruptcies, and to see how their impacts on your credit score differ.
- Chapter 7 bankruptcy: Also known as liquidation bankruptcy, Chapter 7 is what Harrison refers to as “straight bankruptcy.” It’s the most common form of consumer bankruptcy and is usually completed within three to six months. Those who file for Chapter 7 will no longer be required to pay back any unsecured debt , like personal loans, credit cards and medical expenses, but they may have to sell some of their assets to settle secured loans. Chapter 7 bankruptcies stay on consumers’ credit reports for 10 years from their filing date.
- Chapter 13 bankruptcy: Harrison refers to Chapter 13 as the “wage earner’s bankruptcy.” This form of filing offers a payment plan for those who have the income to repay their debts, just not necessarily on time. About a third of bankruptcies filed are Chapter 13 . Those who file are still required to pay back their debts, but instead over a three-to-five year time frame. Chapter 13 bankruptcies stay on consumers’ credit reports for seven years from their filing date.
Bottom Line: Bankruptcy And Credit
I have personally seen the impact of the bankruptcy petition on some debtors five to seven years later and most are doing fine, says Arnold Hernandez, an attorney in Tustin, Calif., who handles bankruptcy cases. Bankruptcy is not forever.
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Bankruptcy Discharge Certificate Canada: How Long Does My Credit Score Take To Recover From Bankruptcy
Your bankruptcy will stay on your for 6 years from the date your bankruptcy discharge certificate Canada is issued. If you have actually been bankrupt more than once, then it might be reported for approximately 14 years from the date of your discharge.
Having actually removed your financial obligation problems by getting your bankruptcy discharge certificate Canada, most individuals see they now have the ability to construct a more powerful financial future. Unless you urgently need to purchase a house for the very first time or buy an auto, you need not also bother with getting approved credit to take on debt right away. Many find they have the ability to live without credit considering that they have a more powerful cash flow than prior to bankruptcy. They are now able to start saving.
While you remain in bankruptcy, you are learning to live your life without credit. You are living essentially on a cash basis. You are not spending more than you make. Your Trustee is advising you to do so on an after-tax basis so that you will not have a nasty surprise when tax time comes.
A Bankruptcy Discharged: First And Second Bankruptcy
When an insolvent debtor files for bankruptcy for a second time, you cannot be discharged after a nine months bankruptcy period. When you dont need to pay the Trustee any surplus income payments, a second bankruptcy lasts for a minimum of 24 months. A second-time bankruptcy filer with surplus income must make those payments for 36 months to qualify to get their bankruptcy discharged.
A third or subsequent bankruptcy follows the same timeline as a second bankruptcy. There is, however, a high probability that the Trustee or creditors will oppose the discharge. Where there is opposition, there must be a court bankruptcy discharge hearing and the court can impose any conditions it deems appropriate.
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How Long Can Bankruptcy Affect Your Credit Scores
Bankruptcy can affect your credit scores for as long as it remains on your credit reports. Thats because your scores are generated based on information thats found in your reports.
But the impact of bankruptcy on your credit scores can diminish over time. This means your credit scores could begin to recover even while the bankruptcy remains on your credit reports.
After the bankruptcy is removed from your credit reports, you may see your scores begin to improve even more, especially if you pay your bills in full and on time and use credit responsibly.
Getting Public Records Changed
After discharge from bankruptcy, your details will still be included in several public records. Some of these will be removed automatically after a certain time, while you’ll need to take action to get others changed, as follows:
- your details will automatically be removed from the Insolvency Register 3 months after your discharge
- if you want your credit record to show you’ve been discharged, you should send confirmation to each of the credit reference agencies and ask them to update your file – remember the bankruptcy will show on your file for 6 years after the bankruptcy order
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Keep Your Discharge Order After Bankruptcy
It’s not a bad idea to keep your discharge paperwork somewhere you can easily find it because you might need it in the future. For instance, a lender might ask for a copy if you apply for credit or a home mortgage. Also, you’ll want to be able to provide the following to any creditor that calls to collect a discharged balance:
- bankruptcy case number
- filing date, and
- discharge date.
The information allows the creditor to verify the bankruptcy and that the discharged debt is no longer collectible. You’ll find the filing date and case number at the top of almost any document you receive from the court. The discharge date will appear on the left-hand side of the discharge order immediately next to the issuing judge’s name .
Why does the filing date matter? Qualifying debts that you incur before you file for bankruptcy are eligible for discharge. Any debts that arise after you file for bankruptcy aren’t included in the bankruptcy.
Why does the discharge date matter? Just because you file for bankruptcy doesn’t mean that you’ll receive a discharge, as discussed above. Being able to provide the discharge date will help you resolve a collection issue more expediently.
Review Your Credit Reports
Monitoring your credit report is a good practice because it can help you catch and fix credit reporting errors. After going through bankruptcy, you should review your credit reports from all three credit bureausExperian, Equifax and Transunion. Due to Covid-19, you can view your credit reports for free weekly through April 20, 2022 by visiting AnnualCreditReport.com.
While reviewing your reports, check to see if all accounts that were discharged after completing bankruptcy are listed on your account with a zero balance and indicate that theyve been discharged because of it. Also, make sure that each account listed belongs to you and shows the correct payment status and open and closed dates.
If you spot an error while reviewing your credit reports, dispute it with each credit bureau that includes it by sending a dispute letter by mail, filing an online dispute or contacting the reporting agency by phone.
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