There is no easy answer to this question, as there are a number of different factors that come into play when trying to figure out how long a personal bankruptcy in Canada will stay on your credit report.
The first thing you need to look at is the length of time you are in bankruptcy before being discharged. The time period here will normally depend on whether you have declared bankruptcy before, as well as you current income level.
It is the goal of the BIA (Bankruptcy and Insolvency Act) to have a process that is fair to both debtor and creditor. The debtor has the bonus of getting a fresh start, while the creditor is able to recoup a portion of what they are owed, without breaking the bank of the debtor. What that means is that those who are in a higher income bracket will need to contribute a portion of their earnings towards the outstanding debt until discharge is granted.
Bankruptcy and Credit Report
The Provincial governments each have their own income limits, which are usually derived from family size. Any monies that are deemed to be surplus may have to be paid to creditors. Anyone filing for personal bankruptcy whose income falls below the limit can usually be discharged in as little as 9 months. Those with a surplus may be forced to wait as many as 21 months.
If you have multiple bankruptcies in your history, you can fully expect any new bankruptcy to remain on your credit report for 9-14 years, depending on surplus income.
The final piece in this financial puzzle comes from the credit reporting agency. In Canada, that could be either one of two credit bureaus – Equifax and Trans Union.
Equifax is the larger of the two credit bureaus, and they will generally keep your bankruptcy on your credit report for 6 years after the discharge date. What that means is that id this is your first time filing, you can expect the bankruptcy to show up on your credit report for 7 years after you officially file. If you have a surplus income, an extra year is usually added, which mean that the bankruptcy would appear for 8 years.
Trans Union takes into account provincial legislation, which muddies the waters a little. The average time period is 6-7 years, but it could go as high as 14 years. The Trans Union website will provide more details on exact time periods.
Life after Bankruptcy
The biggest fear that people filing for personal bankruptcy in Canada have is that they will be unable to borrow money until the bankruptcy is removed from their credit report. It’s a common fear, but not one that is entirely accurate.
Once you have been discharged, you are free to start the process of rebuilding your credit rating, despite the fact that your credit reports shows you filing for bankruptcy. There are plenty of financial institutions in Canada who are willing to lend money or extend a mortgage to those who have filed for bankruptcy.
As long as you have a verifiable source of income, these institutions will be willing to extend you a loan, albeit at inflated interest rates. The good news is that once you have been discharged from bankruptcy, you are left with a minimal amount of debt. This, combined with a verifiable source of income, is actually quite attractive to lenders.
So let’s recap; you can expect a personal bankruptcy to remain on your Canadian credit report for a period of 7-14 years from the filing date. Much of that will depend on your income and the standards set forth by the credit bureau. It’s expensive, but you will be able to borrow money, even when you have a bankruptcy showing on your credit report.