Linda Linfoot

There are several factors we have to consider to answer the question of how long a personal bankruptcy in Canada will remain on your credit report.

The first is how long you will remain in personal bankruptcy before being discharged.  That length of time depends on your income and whether or not you have ever declared bankruptcy before. 

The BIA (Bankruptcy and Insolvency Act) attempts to be fair and equitable to both debtors and creditors.  While debtors are afforded the opportunity to get a fresh financial start, creditors also need the opportunity to recoup some of what they have loaned, without totally destroying debtors.  As such, high income earners are expected to contribute some of their earnings towards debt repayment before they are fully discharged.

Provincial governments set income limits depending on family size and income above the limit is considered “surplus income” and some of it will have to go the creditors.  Personal bankruptcy filers with no surplus income can be discharged in as little as 9 months while those with surplus income may take a total of 21 months before discharge.

If this is your second or third filing, the bankruptcy may remain on your credit report for as long as 9 to 14 years, depending on whether or not you have surplus income.

The final determining factor is the credit reporting agency involved.  In Canada there are two principal reporting bureaus – Equifax and Trans Union.

Equifax is the biggest credit reporting service in Canada and they maintain the bankruptcy notation on your file for 6 years after the date of discharge.  So for first time filers with no surplus income the note would remain for approximately 7 years in total from the date of filing.  For filers with surplus income the note would stay with them for approximately 8 years from the date of filing.

Trans Union states their time period varies depending on provincial legislation, ranging from 6 to 7 years all the way up to 14 years.  For a precise length of time, check the Trans Union Website.

Some consumers who are considering filing for personal bankruptcy in Canada want to know the length of time the bankruptcy remains on their credit. They are operating under the assumption they will not be able to borrow money until the bankruptcy notation disappears from their report.  This is not true.

Once discharged, it is possible to rebuild a credit rating and it is possible to borrow money even though your credit rating clearly identifies you as having filed for personal bankruptcy in Canada.  Believe it or not, there are mortgage lenders in Canada who specialize in loaning money to consumers who have been through bankruptcy.

As long as you have a source of income that can be verified you will be able to borrow money, although it will certainly cost you more in terms of higher interest rates.  Remember, when you are discharged from bankruptcy you have minimal debt, if any, so if you take appropriate steps to begin to rebuild your credit rating and have verifiable income, you are actually an attractive prospect to a lender.

 In summary, a personal bankruptcy in Canada will remain on your credit report for anywhere from 7 years to 14 years from the date you file, depending on your income and the credit reporting bureau’s standards.  Although costly, it is possible to borrow money even with a bankruptcy on your credit report.