Going through bankruptcy is a challenging and significant life event. For numerous Canadians, it becomes the final resort when they’re overwhelmed by increasing debts. Even though this decision can offer a fresh start, it can also pose hurdles for securing loans and credit in the future. By being aware of the options available post-bankruptcy, one can navigate the financial landscape more efficiently.
Know Lender Requirements After Bankruptcy
When lenders review applications, they often look at your credit records and past loan details. If you’ve faced bankruptcy in the past 7-14 years, you might find it hard to get standard mortgages, car loans, or top-tier credit cards. Every lender has unique rules.
Still, there are specific lenders who cater to those looking to fix their credit after such events. While their “second chance” offers might be pricey, they offer a way forward. It’s essential to inquire about a lender’s particular guidelines regarding past financial challenges.
Qualify for an Established Bank Account
Even obtaining a basic checking account at a major Canadian bank proves challenging immediately after bankruptcy and loan discharge. However, institutions like RBC Royal Bank now offer “Second Chance” accounts requiring only $50 to open with no credit check.
Having an established account speeds rebuilding credit. Use it responsibly by avoiding overdrafts and maintaining a positive balance.
Consider Secured Credit Cards
Secured cards allow depositing funds that serve as your credit limit while reporting to bureaus like any card. Home Trust and Capital One offer secured Visa and Mastercard options specifically for rebuilding post-bankruptcy and loan.
Charge small purchases monthly, paying balances in full. Responsible secured card usage shows lenders you now manage credit wisely.
Explore Retail Store Cards
Major retailers often approve in-store credit cards post-bankruptcy as long as you have income. Use store cards only for necessary purchases, pay promptly to avoid interest, and prevent high utilization.
Managing store accounts prudently proves you handle revolving credit appropriately as you work toward prime card eligibility again.
Know When to Re-Apply after Bankruptcy
The waiting periods to qualify for regular credit lengthen after each successive bankruptcy filing. Typically, lenders want to see:
- 12 months of clean history after the 1st one
- 24 months after 2nd one
- 5+ years after 3rd one
Meeting these benchmarks signals your financial situation has stabilized, making you eligible for approval again.
Get a Secured Car Loan
Bad credit car loans secured by a down-payment on the vehicle’s value allow acquiring essential transportation after bankruptcy when traditional auto financing remains unavailable. Rates.ca outlines secured auto loan options for Canadians discharged from bankruptcy.
While costlier, secured loans let you rebuild through on-time payments while accessing a vehicle. Pay off the loan as quickly as possible.
Consider Loan Co-Signers
Asking creditworthy co-signers with income and scores in good standing to apply alongside you improves the chances of approval for necessary loans and credit during your post-bankruptcy rebuilding period. Make sure to repay as agreed to avoid jeopardizing relationships.
Review Your Credit Reports
Before applying for any new financing, check your credit reports again for any lingering bankruptcy records or other inaccuracies that need removal. Dispute any settled, discharged, or duplicate bankruptcy listings with the bureaus for deletion to maximize your approval odds.
Create a Budget and Savings
To avoid needing bankruptcy protection ever again, create a household budget that cuts unnecessary costs in favor of paying off debts and building emergency savings. Make financial stability a priority. Live within your means and save what you can.
We Understand Your Situation
The finance experts at Get Approved Canada help clients just like you with bankruptcies secure necessary loans, credit cards, and other financing to get back on your feet. We know second chances are possible with compassion and commitment. Contact us today – let’s develop a customized plan to restore your financial health for the future.