There are many misconceptions about how a bankruptcy impacts one’s credit. The largest of which is the belief that by filing for bankruptcy in Canada you eliminate any future ability to borrow money. This is not the case. Realistically there is only one restriction on borrowing money that exists, and that is while you are in bankruptcy (i.e. prior to receiving a discharge) you are not eligible to borrow $500.00 or more without informing the lending institution that you have not been yet been discharged from bankruptcy.

Now this doesn’t mean that every lender is required to loan you money, nor that loans will be easy to get after filing a bankruptcy but with a little effort loans are easier to obtain than most people initially assume. When looking for a loan it is important to remember that when institutions are looking to lend money, a number of factors are considered, including your credit history, your income, how stable your income is, what types of assets you own, the debt load you carry and how much money is left over in a normal month after you have paid all you living costs. The important thing to note is that when you look at this list the only item that is negatively affected by a bankruptcy is your credit history. Funny enough, some of the items (i.e. your debt load and cash flow) now appear more positive. So what most people fail to realize, to the lending institution you are in a much less risky position as a result of filing for personal bankruptcy than you would have been if hadn’t filed.

Despite being in a less risky financial position, obtaining credit is going to take a little work as you will not only have to help the bank to recognize that you are in a less risky position, but more importantly you will need to help them to realize that you have learned from the bankruptcy and are not likely to follow the same path in the future. While addressing these issues is largely going to depend on your personal situation, we always suggest you:

1. Develop a regular, disciplined habit of saving prior to applying for the loan;
2. When applying for the loan ask to speak with a person and not rely on the generic application forms;
3. Be open an honest with the bank representative about the bankruptcy, the events that led up to the bankruptcy and what has changed so these events won’t cause the same issues again.

For further information it is a good idea to contact a licensed trustee or email me directly. Either way we will be able to determine the best way to deal with your existing debt and develop strategies to help get life back on track as quickly as possible.