The ability to acquire and use credit has become a normal part of our society.  After filing for bankruptcy, it is also common for individuals to have a need to obtain credit again.

Once you are discharged from your bankruptcy you do have the option to apply for credit.  When a lender looks at your application there are three criteria that most lenders are reviewing:

  • Your income and employment history;
  • Your debt service ratio; and,
  • Your credit bureaux report.

After filing for bankruptcy, you may meet the criteria that lenders set for the first two items on the list.  With no debt owing because of the bankruptcy, your debt service ratio will not be a factor.   Also, your income level is not affected by filing for bankruptcy, though job loss may have been a reason why bankruptcy was necessary.  Your credit score then becomes the biggest obstacle.

The fact that you filed a bankruptcy will be on your credit record 6 years from your date of discharge for a first time bankruptcy event.  With a second bankruptcy, the credit record is affected for a period of 14 years, and with a consumer proposal this is on your record for three years after completing your payments .  Likewise, all the creditors that you included in your bankruptcy will also show on your record for that same six year period.  If you are applying for credit within this six year period your bankruptcy will be an issue in qualifying.

That doesn’t mean that you will not be able to obtain credit during this period.  There are many lenders that offer products that are designed to help individuals rebuild their credit history after a bankruptcy event.   When applying for these products review the terms carefully for high interest rates, and annual or monthly charges.

When you are finished with your bankruptcy you do not want dive into the world of credit too quickly.  Review your financial situation carefully and make sure that the cost of borrowing will easily fit into your household budget.   Also be sure to assess the need for the credit you are seeking.  Ask yourself are there other ways to get what you need instead of using credit.  If you are satisfied that applying for a loan is the best solution, take your time and find the best offer.