Facts About Bankruptcy in Canada
Bankruptcy isn’t always a bad thing
A personal bankruptcy can make it difficult for an individual to a finance vehicle, take out a loan or obtain credit. A bankruptcy can also cause personal stress and lead to conflict in both households and businesses.
Because filing bankruptcy is often described as failure or “giving up”, bankruptcy can be perceived as bad! That is not always the case.
While filing a bankruptcy in Canada is never a good thing to do, it is sometimes the best thing to do. A properly timed and carefully thought out bankruptcy can mean the difference between financial ruin and financial gain!
A bankruptcy can help you start repairing a bad credit history, save you money and also reduce the stress caused by collection calls and other creditor collection methods.
If you complete your bankruptcy on time and slowly build a good credit history the lessons and credit score you gain might just turn your bankruptcy into a good thing!
You don’t have to wait 7 years after bankruptcy
It’s true! A bankruptcy will be visible on your credit bureau for 7 years. After seven years a discharged bankruptcy and any other credit that’s been inactive for 7 years will drop off your credit bureau. That doesn’t mean you have to wait 7 years to fix your credit.
A common bankruptcy myth suggests that you can’t get new credit until a bankruptcy disappears from your credit bureau. That is not true. In fact you can apply for credit while in bankruptcy. There are even banks that approve auto loans in bankruptcy, credit cards and other loans for consumers both in bankruptcy and after bankruptcy.
After bankruptcy loans are common in Canada and although many regular banks won’t approve bankrupt applications, there are plenty of banks and finance companies that will!
You can get approved for an auto loan in bankruptcy
If you’re bankrupt and need an auto loan, then you can still qualify! In Canada bankrupts are approved on bankrupt auto loans and after bankruptcy loans all the time. Not only are bankrupt auto loans common, getting approved on one isn’t as hard as you think!
Having a bankrupt auto loan is an excellent way of rebuilding credit damaged by bankruptcy. If you’re applying for a mortgage or other loan while bankrupt it’s difficult for a bank or mortgage broker to ignore a well paid auto loan. Now that doesn’t mean you will automatically be approved for a mortgage, it does mean that a bankrupt auto loan will create a very positive impact on your credit bureau!
Of course the most important reason to get an auto loan or finance a vehicle is because you need one. An auto loan in bankruptcy might help repair your bad credit but that should never be the only reason to finance an auto loan.
Learn how to Get Approved at Bankrupt Auto Loans!
Bankruptcy only lasts 9 months
That’s right! Bankruptcy is actually a short process. Most people think bankruptcy is a very long and painful process. While 9 months is not a short period of time, it isn’t very long either.
If you’re filing bankruptcy for the first time and you make all your bankruptcy payments on time, then you will qualify for an automatic bankruptcy discharge in 9 months.
There are occasional exceptions to an automatic nine month bankruptcy discharge. Some of the exceptions for 9 month bankruptcy discharge are listed below:
- Failure to make bankruptcy payments on time
- Multiple bankruptcies (2 or more bankruptcies will require a longer bankruptcy term)
- Surplus income (The bankrupt made more income than they originally claimed)
- Creditor or court objection (uncommon but a court or creditor can object to the discharge)
Celebrities file bankruptcy too!
Celebrities and entertainers also bankruptcy! Many famous people and businesses have filed bankruptcy in the past. Check out this list of celebrity bankruptcies:
- La Toya Jackson
- Burt Reynolds
- Cyndi Lauper
- Meat Loaf
- Kim Basinger
- Willie Nelson
- There many more celebrity bankruptcies
If you’re concerned that your own bankruptcy will ruin your reputation or leave you broke forever, don’t be. Most of the entertainers on this list are very wealthy today and because bankruptcy is so common, many people don’t even know these celebrities filed bankruptcy!
Bankruptcy won’t affect your spouse
If you and your spouse keep your finances separate, then you can keep your bankruptcy separate too! It’s actually very common for a husband or wife to file bankruptcy alone.
If a bankruptcy is filed by one half of a household then it will only affect the other half if they share credit being included in bankruptcy.
If a husband and wife have a joint auto loan and the husband files bankruptcy without including the auto loan in the bankruptcy, it will not affect his wife’s credit or the auto loan.
If the auto loan was included in the bankruptcy then it will affect the spouse’s credit. In fact an auto loan included in bankruptcy must be returned to the creditor (unless the loan is more than 2/3 paid). If the vehicle is returned to the creditor then it will be considered a voluntary repo and the repo will appear on the spouse’s credit bureau.
Corporate bankruptcies are famous too!
Many major Corporations have filed bankruptcy in the past. Even strong Corporations you’d never suspect of filing bankruptcy have. Check out this list of business that filed bankruptcy:
- General Motors Corporation
- Air Canada
- Six Flags, Inc
All of these corporations are still around today, some of them very successful. So if you’re bankrupt or thinking about filing a bankruptcy, remember that these examples prove that bankruptcy is not the end!
Come back soon to Bankrupt Auto Loans for more Canadian Bankruptcy Facts!!!