You can’t get credit in bankruptcy!

Bankruptcy Myth

Yes, you can still get credit in bankruptcy! In fact, you can even finance a car loan while bankrupt. There are even circumstances in Canada where you can qualify for a car loan immediately after filling bankruptcy.

One of the more common bankruptcy myths in North America (and presumably other countries as well) is that bankruptcy will paralyze your financial situation to point where you can’t recovered. Wrong!

Bankruptcy is meant to rehabilitate bad credit and rebuild credit history.  Yes a bankruptcy will hinder your credit situation and cause loan applications to be declined but it will not erase all opportunity.

Secured credit cards, subprime loans and bankruptcy car loans are all available to consumers in Canada who are experience a bankruptcy.

Bankruptcy is a long process

Bankruptcy Myth

Bankruptcy is not a long process. If a debtor is filing their first bankruptcy, then they can be discharged from bankruptcy in 9 months.

The exceptions to automatic bankruptcy discharge in 9 months are:

• Filing a 2^nd bankruptcy (or 3^rd bankruptcy and so on)
• Poor trustee payment history (you’re not making your bankruptcy payments on time)
• Surplus income (you’re making more money than you claimed or were expected to)
• Consumer Proposal (you didn’t file bankruptcy, you filed a consumer proposal)

A bankruptcy can also be held longer than 9 months if the bankruptcy courts file a petition against the insolvent. This can happen when there are credits disputing bankruptcy terms, surplus income or other reasons.

The “bankruptcy is a long process” myth is common and unfortunate situation where uninformed individuals confuse the public. Bankruptcy may not be the ideal financial situation for a Canadian but it is also not always a long process.

Bankruptcy is expensive

Bankruptcy Myth

Bankruptcy is not expensive. Bankruptcy is actually a very affordable way to absolve debt, fix bad credit and make a fresh financial start. The cost of a bankruptcy depends on several factors but overall bankruptcy is a cheap and affordable situation.

Unlike credit counseling or a consumer proposal, bankruptcy is quick process. A bankruptcy in Canada will usually last 9 months. The fees paid in bankruptcy are often called Trustee Payments. Since your trustee payments will likely be scheduled on a monthly basis. A bankruptcy will only consist of 9 monthly payments (and sometimes a retainer and/or administrative fee).

These bankruptcy fees are paid to your Trustee in Bankruptcy and are regulated by the Canadian Government. This keeps bankruptcy fair and inexpensive. If you consider the most common size of bankruptcy in Canada, a monthly bankruptcy trustee payment will usually be in the $150-$300 a month range.

Bankruptcy will affect my spouse’s credit

Bankruptcy Myth

If you file a personal bankruptcy it will not affect your spouse or your spouses credit. A bankruptcy or consumer proposal only affects the individual filling and their creditors.

If you file a bankruptcy and include debt that is joint with your spouse, then yes it can affect their situation but not if their finances are separate from yours.

If you share a lot of debt with your spouse then a join bankruptcy can be filed. Regardless which type of bankruptcy you enter into, if you are sharing a financial situation (as many spousal units do) then it’s important you discuss and consider that decision with your husband, wife or common law.

More Bankrupt Myths Coming Soon.

Thanks,

The Bankrupt Car Loans Team