The current economic situation leaves something to be desired. Jobs are insecure and debts continue to grow. Thus, for a significant part of the population, nothing remains but declaring bankruptcy. Although it is a difficult situation mentally and emotionally, is it really the end of the world? Far from it, actually. With proper planning and a lot of diligence, you can rebuild your credit and you can even borrow money to resume the normal course of your life (click here to find out how the credit score is calculated).
Do not get stuck with the bankruptcy release
The first step is to get bankruptcy release as soon as possible. Consult with your trustee / agent to see what steps are required to accomplish this. You will have to send your pre-bankruptcy returns, your T4 tax slip and, subsequently, your trustee will receive your post-bankruptcy return. You should also submit proof of your monthly income so that they determine what part of your extra income will go to pay during your bankruptcy. To these payments are added also the payments for the administration of the property and the goods. In addition, you will have to sell some of your assets such as home or auto. Your credit cards will need to be given to your trustee. Finally, you will take courses on managing your credit. The first session should be followed no later than 60 days after the declaration of bankruptcy and the second, 210 days. In order to be eligible for the bankruptcy release, you will have to wait at least 9 months, so do all your homework during this period.
Start Saving Money and Rebuilding Your Credit
Now that you have got your bankruptcy release, you must repair your credit score. First, you must learn how to manage a budget. To do this, you must track your income / expenses and you must also spend less than you earn. In this way, you will save money that will be useful during emergencies or for a guaranteed deposit when applying for a new loan. If you get a new loan, you can start building your credit again. In addition, if your savings are good, you can open an RRSP account.
With an improved credit score and some savings in your accounts, you can easily start borrowing money, but with some restrictions. Remember that a first bankruptcy declaration is inked on your credit report for the next 6 years. Even after 6 years, you will still have to disclose this information to your creditors. Your best solution at this point is to save until you have 5% for the first deposit, which would allow you to insure your mortgage. In general, to do this you will have to wait 2 years after the bankruptcy release and you will need to have at least 1 year of “good” credit.
Do not forget ! There are many ways to get out of bankruptcy and start rebuilding your credit rating. Consult your trustee before declaring bankruptcy in order to analyze all the options available to you.