In Canada, it is possible to get a loan following a bankruptcy. Whether you are looking to get a mortgage, line of credit or car loan after bankruptcy, you can. Here’s what you need to know:
Bankruptcy Counselling Before Or After You File
Bankruptcy counselling is available to anyone who has recently filed or is looking to file for bankruptcy. A counsellor will help you get your finances in order and educate you on the types of loans that will be available to you once your bankruptcy has been discharged. Moreover, a bankruptcy counsellor can give you ideas on how to repair your credit so that you’ll be able to easily apply for a loan when the time comes.
After nine months, many people are eligible for an automatic discharge from bankruptcy. A discharge releases you from the personal liability of certain types of debt. This means you will no longer be legally required to pay any of the debts that are involved in the discharge. However, if this isn’t your first bankruptcy you may not be eligible for a discharge until 24 months have passed. Or, if you have surplus income that exceeds the amount that has been set by the government, you may need to wait at least 21 to 36 months for your discharge.
Get Your Credit In Order
After bankruptcy, your credit will be severely bruised however if you were in financial difficulties that led to a bankruptcy your credit was likely already in or headed to a bad situation . Repairing your credit will allow you to show lenders that you can handle a loan in the future. In order to repair your credit you should:
- Spend less to avoid further debt: During your bankruptcy financial counselling sessions, your counsellor can help you create a budget that works for your financial situation. Furthermore, your counsellor will show you how to spend less money than you earn so you can avoid debt problems in the future.
- Save money: This may be easier said than done, since you will be on a very limited budget while you navigate your bankruptcy. However, once you finish you bankruptcy you should plan, where possible, to put some money aside every month. Then you will have an emergency fund available when you need them. Plus, it is also helpful to have savings for future down payments for any big purchases.
- Pay your bills on time: This goes for all your bills including rent, mortgage payments, heat, water, electricity, internet, TV, phone bills, etc. Your credit will suffer even more if you are late making your monthly bill payments.
It is always possible to get a loan after bankruptcy just don’t expect it on the day of your discharge. Give your creditors some time to rebuild their confidence in you and the credit will follow. Also, it is important to remember that there are many creditors who want to take advantage of people in poor credit situations. When obtaining credit you must be more diligent in understanding the costs and interest rates involved and not just picking the first credit that is offered. We can help you understand the process of a bankruptcy or a consumer proposal and offer insight into what options will best suit your financial situation. For more information about our counselling services please contact us today.