How Will A Consumer Proposal or Bankruptcy Affect My Credit Rating?
Credit information is gathered by credit reporting agencies, sometimes called credit bureaus. There are two major credit reporting agencies in Canada: Equifax Canada Co., and TransUnion of Canada. Governed by provincial and federal laws, credit reporting agencies store and maintain credit information about individual Canadian consumers for use by members of the credit reporting agency. They gather their information from lenders, collection agencies and from public records. Members include banks, finance companies, auto leasing companies, credit card companies and retailers.
A consumer proposal is usually a matter of public record and reflected on your credit report. This information is available to credit grantors and may affect your ability to get credit in the future. However, if you have currently missed payments to your creditors or find yourself in collections already, this information is most likely already reflected on your credit rating. Filing a consumer proposal is generally reported on your credit report for a shorter period of time, and usually considered a better rating than if you file for bankruptcy. The proposal stays on your credit file for 3 years from the date of completion. While most consumer proposals are set over a 60 month term, the debtor has the opportunity to pay it off faster to reduce the amount of time their credit rating is impacted.
Bankruptcies are also a matter of public record and will be reflected on your credit report. A first bankruptcy will stay on your credit report for a period of 6-7 years (depending on Province) from the date of discharge. Assuming the debtor has no surplus income, the bankruptcy will be automatically discharged after 9 months. If the debtor has surplus income obligations the bankruptcy will be discharged after 21 months. A second bankruptcy will be reflected on the debtor’s credit report for a period of 14 years from the date of discharge. A debtor with no surplus income will receive a discharge after 24 months, while a debtor with surplus income obligations will receive a discharge after 36 months.
Powell Associates Ltd. is a Licensed Insolvency Trustee (LIT) focused on providing debt settlement, proposal and bankruptcy solutions for individuals and businesses. We offer free consultations to review your personal financial situation and practical debt resolution options. Contact us to discuss your situation over the phone or book an appointment to meet us face-to-face in Saint John, Moncton, Fredericton, Charlottetown or Dartmouth - it's your choice.