How Long Does Bankruptcy Affect My Credit Report?

| Category: Bankruptcy FAQ | Bankruptcy in Ontario
Category: Bankruptcy FAQ | Bankruptcy in Ontario | (35) comments

credit report and bankruptcyThere are two main credit reporting agencies in Ontario: Equifax and Trans Union. Information about your bankruptcy or consumer proposal is reported to these agencies by the Office of The Superintendent of Bankruptcy (OSB), not your trustee. The OSB will advise these agencies when you file a bankruptcy or proposal and when you receive your discharge.

If you file ANY of a bankruptcy, consumer proposal, debt management plan or do a debt settlement, a not will appear on your credit report that can negatively impact your credit. In general:

  • a first bankruptcy will remain on your credit report for six years (Equiax) or seven years (TransUnion) after you are discharged;
  • a consumer proposal (or debt management or debt settlement plan will remain on your credit report for three years after all of your payments are completed.

Bankruptcy does not mean you cannot borrow for six or seven years. This just means that the note will remain on your report, however there are many other factors that affect your ability to get credit.

If you have a job, and if you have a down payment or security deposit, it is possible to repair your credit sooner. Many people are able to buy a car or a house in less than seven years after their bankruptcy ends, if they are able to save money and begin repairing their credit. Here are some ways you can improve your credit after filing for bankruptcy:

  1. Pay you bills on time.
  2. Get a copy of your credit report, review it for errors and make sure your bankruptcy notice is removed when it should be.
  3. Start saving so you can have a larger down payment which will positively affect your ability to be approved for a new loan.
  4. Consider rebuilding  your credit with the use of a secured credit card.
  5. Once you do receive credit, use it wisely. Show that you can make your payments on time and do not over-use credit again.

Saving money, paying your bills on time and re-applying for credit slowly can change how long bankruptcy affects your credit, and your ability to borrow in Ontario.

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    1. Angela

      Hi my name is Angela and was wondering how does a second bankruptcy work. Unfortunately I am becoming overcome by debt and might have to look into bankruptcy a second time the first one was in 2005 and discharged a year later . Any help would be grest

      Reply
      1. J. Douglas Hoyes, Trustee

        Hi Angela. In a first bankruptcy you are eligible to be automatically discharged in 9 months (or 21 months if you have surplus income).

        In a second bankruptcy you are eligible to be automatically discharged in 24 months (or 36 months if you have surplus income). So, the most significant impact of a second bankruptcy is that it lasts longer. For that reason it may be wise to consider a consumer proposal as an alternative to a second bankruptcy.

        Reply
  1. J. Douglas Hoyes, Trustee

    If you have ceased to be a student for more than seven years at the time you file bankruptcy, your student loans are included in the bankruptcy. If you have been out of school for less than seven years they are not automatically discharged.

    The seven year rule can get a bit complicated, so I suggest you contact an Ontario bankruptcy trustee to explain the rule in more detail and advise you on your options.

    Reply
  2. Alona

    Hey,

    I’m 23 years old. Don’t have any assets. Can’t repay my loans. Am I qualified to file for bankruptcy?

    If not, how am I settle debt with no income yet?

    Reply
    1. Michael

      Hello.. I am currently thinking of filling for bankruptcy, and in regards to all the negative aspects of such, I am prepared to deal with those. However, one of my debts is a $1000 over-drawn bank account that I shared with my now estranged wife. Her name is still on the account, and the bank refuses to remove it, despite the fact the she hasn’t used or had access to the account in over a year, until the over-draft is paid off. Is there going to be negative consequences for her because her name is still on this account? I don’t want her to have to suffer for debt that I accumulated.

      Reply
      1. J. Douglas Hoyes, Trustee

        Hi Michael. If you go bankrupt, all of your debts are included in your bankruptcy, including your overdraft. The bank would then be able to pursue the joint borrower (your ex-wife) for the debt. The only way to prevent this is for you or your ex-wife to pay off the overdraft before you file bankruptcy.

        Reply
  3. Patricia

    What happens when a bankruptcy is removed from Equifax but not Trans Union. Its been 6 years since my bankruptcy and Equifax has removed it from my report but Trans Union says its seven years before it comes off.

    Reply
    1. J. Douglas Hoyes, Trustee

      Patricia: Each credit reporting agency in Ontario determines how long they will report a bankruptcy. Equifax purges a first bankruptcy six years after discharge, while Trans Union may leave it there for seven years. In your case you can take steps to rebuild your credit now, but the bankruptcy may remain on your Trans Union credit report for seven years.

      Reply
      1. Ron

        I’m curious. You mentioned Equifax drops bankruptcy after 6 years and transunion after 7.

        This is due to transunion following the maximum reporting allowed under law in ontario.

        If I moved to a province that has a legal max of 6 years would transunion be legally required to follow the maximum as prescribed by the province I live in or by the province a person lived in when a bankruptcy occurred.

        Reply
        1. J. Douglas Hoyes, Trustee

          Hi Ron. That’s a good question, and I don’t know the answer, but I would speculate that since bankruptcy is federal law and credit reporting is governed by provincial laws, I would assume that the laws in the province where you currently live would apply, because that’s where you are getting your credit report.

          Reply
  4. J. Douglas Hoyes, Trustee

    Alona: Yes, you are qualified to file bankruptcy if you owe more than $1,000 and are unable to repay your debts. However, since for many people the reason they claim bankruptcy is to prevent their wages from being garnisheed, your other option would be to wait until you are working and then contact your creditors directly to arrange a repayment plan. A credit counsellor can also help with this. You could also consult with a bankruptcy trustee to review your options.

    Reply
  5. Sandi

    I was involved with a consumer proposal 7 years ago. The proposal has been lifted from my credit score BUT one of the creditors that was included in the proposal still remains on my record. Is this right?

    Reply
  6. J. Douglas Hoyes, Trustee

    Hi Sandi. After seven years the creditor should no longer be appearing on your credit report, since the maximum period most information remains on a credit report is for six years. I would suggest you confirm that all of the dates on your credit report are correct, and that there was no activity on your account after the proposal started. You should also notify both the credit bureau and the creditor of the error and ask them to correct it.

    Reply
  7. gerry

    i was told that bankruptcy is now 9 months before discharge i went through it in 2010 it was 21 months . i know a woman that wants declare bankruptcy is on welfare her trustee told her 9 months ?

    Reply
    1. J. Douglas Hoyes, Trustee

      Hi Gerry. The length of a bankruptcy depends on many factors, including your income, and whether or not you were previously bankrupt.

      A first time bankrupt with no surplus income is eligible to be automatically discharged in nine months. Your friend on welfare would therefore have low income, so yes, she would probably be a nine month bankruptcy.

      In your case your income was probably above the limit, so your bankruptcy was extended for an additional year, which is why your bankruptcy was 21 months.

      Reply
  8. Jenniffer C.

    HI…I was discharged from bankruptcy on April 28th, 2008. A year or so later I acquired a Secure Credit Card. In 2010 I purchased a Honda CRV with a good downpayment and was able to get honda to finance the rest. My Crv will be paid off this coming may. I now have a small business (incorporated) for over a year now. (besides my fulltime permanent elementary school teaching job -have been teaching for 15 years). I would like to apply for a small business credit card but not sure if my ‘bankruptcy’ term is over.
    Any help is appreciated!
    Thanks

    Reply
    1. J. Douglas Hoyes, Trustee

      Hi Jennifer. There are two different concepts here:

      Yes, your bankruptcy is over; it ended when you were discharged in 2008, which is why you have been able to obtain credit.

      You are presumably asking about how long bankruptcy appears on your credit report. With Equifax it appears as a note on your credit report for six years after you are discharged, so if you were discharged in April 2008, the note will appear until April 2014, so the answer is yes, the note should no longer appear on your credit report. To be sure, you can contact Equifax and Trans Union and request a free copy of your credit report, which should confirm that your bankruptcy no longer appears on your credit report.

      Reply
  9. Sharon M.

    I have seen a trustee and though she recommends Bankruptcy given my income level, I am inclined toward a Proposal as I see it as the lesser of two evils. Plus, I volunteer on two not-for-profit Boards and am pretty sure that a bankrupt cannot be a Director on a Board. Is that correct?
    If it is correct, how long would it be before I can sit on a Board?

    Reply
    1. J. Douglas Hoyes, Trustee

      Hi Sharon. A bankrupt cannot serve as a director of a corporation. In most cases it’s not an issue if you are on the board of a not-for-profit agency. To be sure, you should consult the agencies bylaws, and confirm that if your agency has director’s insurance you will still be covered if you are bankrupt.

      As for a proposal being the “lesser of two evils”, that may be true, but you will want to confirm that the amount you will pay in a proposal is reasonable given your income, which may be why the trustee recommended a bankruptcy.

      Reply
  10. Francis

    Hi I’m considering a consumer proposal, and I’m aware that it will stay on my report 3years after the discharge, I’m worried that even though it will disappear from my credit after 3 years the bank will blacklist my name for ever for any future borrowing. This worry me cause I’m in debt will all major banks in Canada and I’m worried it will stay in their records for ever.
    Pls advise any help is appreciated.
    Thanks.

    Reply
    1. J. Douglas Hoyes, Trustee

      Hi Francis. Banks don’t “blacklist” people because they want customers. So, even though you owe money to banks now, if you complete your proposal and rebuild your credit, it is very likely that you will be able to borrow again in the future, provided you meet the normal lending requirements (such as suitable income, etc.).

      Reply
  11. Karol

    Bankruptcy filed in 2009, discharged in 2010. On my Trans Union file under the Bankruprcy section it says this was ‘reported on’ and ‘updated on’ February 2012. This in turn has changed the ‘last payment date’ on some of my creditor files included in the bankruptcy to March 2012 however these accounts were closed in 2009. First what would have triggered a date change under the Bankruptcy section and second how do I correct the dates on the creditor files in question?

    Reply
    1. J. Douglas Hoyes, Trustee

      That is a very interesting question. It would appear that there is an error on your credit report, because obviously the last activity date should show as the date of discharge, not a subsequent date. It is possible that there was an error on the discharge date reported to the credit bureau; perhaps the trustee’s discharge date was reported, instead of your discharge date.

      Regardless, the first step would be to talk to your trustee to confirm that you have your correct date of discharge. Then you should complete the dispute resolution form included with your credit report and send that to Trans Union and ask them to correct it.

      It would also be prudent to get a copy of your credit report from Equifax to see if it contains the same error.

      Reply
      1. Karol

        I received a letter in early 2012 from my trustee that indicated my trustee, in regards to my estate, had ‘applied for taxation of our accounts and for our discharge’. The Superintendent of Bankruptcy issued a letter of comment to my trustee ‘that does not request that our accounts be taxed by the registrar’. This seems to have triggered a ‘disbursement’ of ‘dividends’ in my estate account to creditors that were included in my bankruptcy. Dates seem to collaborate this conclusion however this only shows up on the TransUnion file not Equifax. The discharge date is correct on the TransUnion file but the ‘reported on’ and ‘last updated on’ date changed in regards to above comment. Will I be able to dispute these date?

        Reply
  12. Vincent

    Does the bankruptcy purge 6 years to the date for Equifax, or by the month? I was discharged Aug 26, 2009, therefore technically free on my report from Equifax in 2 days, as it will be exactly 6 years, however I hear repeatedly examples only mentioning the month. Does this mean that it will remain until 12:00am September 1st?

    I know TransUnion is 7 years. I am trying to secure a mortgage with a lender that only uses Equifax, but I don’t want to get the loan until it is removed completely for a better rate.

    Thanks!

    Reply
    1. J. Douglas Hoyes, Trustee

      Hi Vincent. You would have to contact Equifax to get an exact answer, but it would be safe to assume that since Equifax doesn’t necessarily update your credit report every day, it’s best to wait until the start of the next month to check your credit report to confirm that the bankruptcy was purged.

      Reply
  13. Ross

    I can’t seem to get a straight answer about proposals. Does it stay on my credit file for 3 years or 7 years? Does the creditor disappear from my file, or is it just reported differently somehow? If it’s 3 years, does the clock start ticking on that as soon as I pay off the required amount, even if it’s before the term (48 months) is up?

    Reply
    1. J. Douglas Hoyes, Trustee

      Hi Ross. The note in the “legal section” of your credit report stays on your credit report for three years after you have made all of the payments in your proposal. For example, if you have a five year proposal, but you pay it off early in three years, the note would remain on your credit report for a total of six years from the start of the proposal (three years for the proposal, plus an additional three years).

      Each individual creditor reports individually to the credit bureau, and in most cases what they report stays on your credit report for six years from the date of the last activity. So in most cases they stop reporting once the proposal is filed, so the notation submitted by the creditor would be purged after six years, regardless of when the proposal is completed.

      Reply
  14. John

    Hi, im thinking about doing personal bankruptcy, I’m currently on welfare and don’t have a job at the moment .I was told that if I was to do this I wouldnt be able to get a credit card for 6 months(which is fine) but wasnt told it would stay on my credit report for 6-7 years, which My question is I plan on going back to school and I will need OSAP’s assitance to do so will I not be able to do this if i declare bankruptcy? Also how long would it be before i could get a loan for school, finance a car or buy a house. I’m thinking about my future and dont want to get my self into a situation where i couldnt do any of those for 7 years but mainly osap cause going back to school is something i want to do within a year or so . And one other thing is this is my first time declaring bankruptcy if this matters at all, Thank you for your time

    Reply
    1. J. Douglas Hoyes, Trustee

      Hi John. It is possible to qualify for OSAP (student loans) even if you are bankrupt.

      The standard procedure is to apply for OSAP, and if OSAP has any questions the licensed insolvency trustee who is doing your bankruptcy will send a letter to OSAP advising that the trustee will not take your OSAP. That is usually all OSAP requires.

      To find out more, we suggest you contact an Ontario licensed insolvency trustee who will give you a no charge initial consultation and review all of your options.

      Reply
  15. Rob m.

    I filed for bankruptcy in jan 2009 and was disharged in march 2010.

    Back then, they told me it would be on my record for 7years total, 6 years after being discharged.

    I called trans union to make sure it has been removed from my file (may 2016) and they say ontario law is 7 years from discharge????

    I see on your site above you also mention 6 years like my trustee said.

    But I found ontario sites that say 7 years from discharge.

    Have the laws changed??? Was I misinformed??

    For the record it was my first bankruptcy

    Reply
    1. J. Douglas Hoyes, Trustee

      Hi Rob. The confusion is that Equifax generally removes the first bankruptcy six years after discharge, while TransUnion removes it after seven years, so the length of time will depend on which credit bureau you are looking at.

      Reply
  16. Sandy

    I filed for bankruptcy back on 2000 but never completed the required steps in order to get it discharged. I was told that after 10 years it should automatically get discharged even if all requirements were not met. The bankruptcy no longer shows on Equifax but it still shows on Transunion. I called Transunion and they said it will never be removed until the receive a discharge notice from the trustee. How do I get this removed from the credit report? Do I have to go back to the original trustee and have them reopen the bankruptcy even though it’s been 16 years?

    Reply
    1. J. Douglas Hoyes, Trustee

      Hi Sandy. You are asking two different questions.

      First, how bankruptcies are reported on the credit reports is up to the credit reporting agency. In your case Equifax has purged it, but TransUnion hasn’t, so it’s up to TransUnion how they handle their reporting.

      Seconde, the ultimate solution is to complete your duties and obtain your discharge, and for that you should contact your original trustee to determine what steps are required.

      Reply

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