Both Equifax and TransUnion use proprietary formulas to calculate your credit score. The following factors can affect your credit score:
Payment history – are you carrying balances month to month or have you missed or made late payments
Utilization rate – a percentage of credit utilized. (Ex. Owing $4000 on a card with a $5000 limit = 80% utilization)
Account History – how long have you had credit
Inquiries made about your credit – how many times has a 3rd party looked at your credit report
Types of credit being used – whether you only have credit cards or a mix of credit cards and other types of loans
Derogatory Information – debts referred to a collection agency, judgments, Credit counselling, Debt Settlement Programs, Consumer Proposal or Bankruptcy filings.
Filing for Bankruptcy or a Consumer Proposal will require your creditors to cease collection activities, however, after filing, it can take a few weeks for creditors to stop calling. This delay is often associated with the time it takes to receive notice of your filing, update your account accordingly, and remove your account from active collections workload.
As long as you have not attended school, either full or part-time within the last 7 years, your student loan debt will be included in your bankruptcy. If you are unsure of the exact date, please contact the National Student Loan Service Centre (1-888-815-4514) and ask “What is my end of study date”. If you have attended school within the last 7 years and you file for bankruptcy, your student loans will not be included in your bankruptcy.
Assuming you can afford the finance/lease payment, and you keep your payments up to date, you can keep your financed/leased vehicle even after filing for bankruptcy. After you have been discharged from bankruptcy, you would still be liable for any remaining finance or lease payments for the vehicle.
If you file for bankruptcy during 2021, the Trustee is required to file a 2021 pre & post-bankruptcy return on your behalf. These returns will be filed by the Trustee during the spring of 2022. If there is a refund from either return, CRA will send the refund to the Trustee for the general benefit of your creditors.
The amount a person is required to pay to file bankruptcy is determined by their income, family size and whether they have “realizable assets” (ex. equity in a home, or other non-exempt assets). Depending on family size, the Office of the Superintendent of Bankruptcy (OSB) sets guidelines that specify how much you require to cover the basic necessities of life. While in bankruptcy, you must report your income to the Trustee on a monthly basis. If your average monthly net income during your bankruptcy exceeds the guidelines set by the OSB, the amount you are required to pay, as well as your duration in bankruptcy, can increase.
If you are applying for credit in the amount of $1000 or more, you must disclose the fact you are bankrupt to the potential lender. It is at the lender’s discretion whether they agree to lend funds while a person is bankrupt. Generally, it is easier to begin re-establishing credit once you are discharged from bankruptcy.
No, many people who have filed for bankruptcy can start to re-establish credit once they have been discharged, provided they have a steady source of income upon discharge.
Generally, a first-time bankrupt will be discharged from bankruptcy after 9 months from the date of filing provided there is no surplus income pursuant to OSB guidelines, and duties are completed (complete 1st & 2nd counselling sessions, provide monthly income and expenses while bankrupt, pay bankruptcy administration fees, and provide information for the Trustee to prepare pre & post-bankruptcy returns). During the bankruptcy, you must also keep the Trustee notified of any changes to contact information and notify the Trustee of receipt of any “After-acquired assets” (ex. inheritance, lottery win, successful lawsuit, retroactive payments or other lump sums you might receive prior to your discharge).
In a Bankruptcy, our regulator – the Office of the Superintendent of Bankruptcy (OSB) dictates how much income a Bankrupt individual will require to cover basic necessities depending on family size. The guidelines reflect net monthly income from all sources after mandatory deductions. The guidelines for 2023 are as follows:
1 Person
Family of 2
Family of 3
Family of 4
Family of 5
Family of 6
Family of 7+
Amount for Household
$2543.00
$3165.00
$3891.00
$4725.00
$5359.00
$6044.00
$6729.00
Amount allowed if spouse not filing and not disclosing income
N/A
$1582.50
$1945.50
$2362.50
$2679.50
$3022.00
$3364.50
Additional credit is allotted to these figures in the event the Bankrupt person has verifiable non-discretionary expenses such as allowable child care expenses, medical/health-related expenses, child/alimony support payments, employment expenses (as allowed by CRA), fines/penalties imposed by the Court, or minimum payments required on student loans that would not be covered in Bankruptcy. After filing, a Bankrupt must provide proof of income and non-discretionary expenses while in Bankruptcy. If the average net monthly income after mandatory deductions exceeds the guidelines noted above beyond the allowable threshold, the Bankrupt would be deemed to have surplus income and their Bankruptcy would be subject to a 12-month extension.
For more information on how these guidelines would apply to your specific situation, please do not hesitate to contact our office for a free, no-obligation, consultation.
Equifax will keep a record of a bankruptcy filing on your credit report for 6 years after your discharge from bankruptcy (1st time bankrupt). TransUnion will retain these records for 7 years after your discharge from bankruptcy (1st time bankrupt). In either case, although the record of bankruptcy is kept for 6/7 years from your discharge, generally you can start to re-establish credit once you have been discharged from bankruptcy, provided you have a steady and stable source of income upon completion of your bankruptcy.
The trustee does not have access to your credit report. Bankruptcy filings are reported to Equifax/TransUnion by the Office of the Superintendent of Bankruptcy (OSB). During the course of your bankruptcy, our office will provide you with the resources necessary to obtain a free copy of your credit report, understand how to build & maintain “good” credit, and correct errors on your credit report, if applicable.
As long as you and your spouse do not have joint debt that would be included in your bankruptcy filing, your spouse is not affected by your bankruptcy filing.
No, your spouse is not required to file for bankruptcy simply because you might have filed. However, if both parties have joint debt, the non-bankrupt spouse will remain liable for payment.
Most Bankruptcy filings on behalf of individuals, do not require newspaper publication. If your potential bankruptcy filing would require publication, we would discuss this with you and review the merits of filing a proposal which does not require publication.
A mortgage on home would be a secured debt. If you file a Consumer Proposal, you can elect to continue payments to your secured creditors. As long as you keep your mortgage payments up to date, you would be able to keep the mortgaged home after filing a proposal.
A vehicle subject to a finance/lease agreement would be a secured debt. If you file a Consumer Proposal, you can elect to continue payments to your secured creditors. Assuming you can afford the finance/lease payment, and you keep your payments up to date, you can keep your financed/leased vehicle even after filing a Consumer Proposal.
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