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How Long Does Bankruptcy Appear on a Credit Report?

Matthew R Harris Law P.C. Jan. 10, 2024

Man opens his empty wallet without money If you've been researching the impacts of bankruptcy, you already know how declaring bankruptcy can significantly impact your credit score. Negative information such as late payments, missed payments, and accounts sent to collection agencies can hurt your credit score. Bankruptcy falls under this category of negative information. 

However, it's important to remember that everyone's credit history is unique, and the impact of bankruptcy will vary from person to person. That said, the presence of bankruptcy on your credit report will make it more challenging to secure new credit or loans. But does it live on your credit report forever? No, fortunately, it does not.  

The Duration of Bankruptcy on Your Credit Report

In January 2023, the number of insolvencies (bankruptcies and proposals) experienced a significant increase of 33.7% compared to January 2022.  

This surge in insolvencies is of particular concern given that bankruptcies remain on a credit report for a significant period of time. Bankruptcy doesn't remain on your credit report forever, but its duration does vary based on several factors:

  • In general, both Equifax and TransUnion — the two main credit bureaus in Canada — remove a bankruptcy from your credit report six years from the date you're discharged.  

  • However, certain provinces have different timelines. For example, in Ontario, Newfoundland and Labrador, Prince Edward Island, and Quebec, TransUnion extends this period to seven years. 

  • And if you declare bankruptcy more than once, brace yourself for a longer duration. Multiple bankruptcies will appear on your credit report for 14 years.  

It's important to be both aware and mindful of these timelines, as they play a significant and pivotal role in the process of rebuilding your credit after experiencing bankruptcy.  

Alternatives to Bankruptcy 

If the prospect of having bankruptcy on your credit report for several years is daunting, there are alternatives to consider. One such option is a consumer proposal, a legal agreement set up by a licensed insolvency trustee. This allows you to pay off a percentage of your debt, and it's removed from your credit report three years after you pay off all the debts included in the proposal, or six years after you sign the proposal, whichever comes sooner. 

Another alternative is a debt management plan, an informal proposal made to your creditors by a credit counselor to consolidate your debts into one affordable monthly payment. Records from a debt management plan are removed from your credit report two years after you pay off your debts. 

Navigating Post-Bankruptcy Credit Rebuilding

While bankruptcy can hurt your credit, so can carrying a high debt load. Say you've decided to pursue bankruptcy, or you've already filed. Now's a great time to shift into preparing for the road ahead.  

Rebuilding credit requires a well-thought-out plan. It's not about quick fixes but rather about establishing long-term habits that demonstrate your creditworthiness. Here are five steps to take while rebuilding your credit:  

  1. Get a secured credit card to start rebuilding your credit. 

  1. Make timely payments on current bills and debts. 

  1. Keep an eye on your credit report for any mistakes or inaccuracies. 

  1. Use credit sparingly and wisely, keeping balances low and paying them off in full each month. 

  1. Be patient; it takes time to rebuild your credit after bankruptcy. 

By following these steps and staying financially responsible, you can improve your credit score over time and move towards a more stable financial future. Remember that declaring bankruptcy is not the end of your financial journey; it's an opportunity to learn from past mistakes and make better choices moving forward. So don't let the duration of bankruptcy on your credit report discourage you, stay optimistic and 

While the impact of bankruptcy on your credit report can feel overwhelming, it's not insurmountable. With time and diligent financial habits, you can rebuild your credit.  

How to Prevent Bankruptcy

While bankruptcy can be an extremely beneficial tool for rebuilding your finances, it's not the only path toward relief. And given the lasting impacts it can have on your credit, you may be looking at it as a last resort. That's completely understandable. So how about some strategies on preventing bankruptcy and digging out of debt? 

Managing money effectively is a crucial skill for avoiding bankruptcy and maintaining financial stability. Here are some tips to help you along this path: 

  • Create a Budget: A budget provides a clear picture of your income and expenses. It can help you understand where your money is going and identify areas for savings. Make sure to account for all income and outgoings, including bills, groceries, and discretionary spending. 

  • Save Regularly: Developing a habit of saving, no matter how small the amount, can significantly impact your financial health. An emergency fund is particularly important as it can provide a financial buffer in times of unexpected expenses. 

  • Pay Debts on Time: Timely payment of debts helps avoid late fees and protects your credit score. If possible, pay more than the minimum payment each month to reduce your debt load quicker. 

  • Avoid Unnecessary Debt: While credit can be a useful tool, it's important to use it wisely. Avoid incurring debt for non-essential items and try to live within your means. 

  • Educate Yourself About Financial Management: Keep learning about financial management, whether through books, online resources, or financial literacy programs. This knowledge can help you make informed decisions about your finances. 

  • Seek Professional Help When Needed: If you're struggling with debt, it's important to seek help as soon as possible. A credit counselor or financial advisor can provide advice and guidance to help you navigate financial challenges. 

Remember, everyone's financial situation is unique. The key is to understand your financial position and take proactive steps toward managing your money more effectively. Don't hesitate to seek professional advice if you're feeling overwhelmed; it's never too late to restructure your approach to finances.  

Ask a Bankruptcy Lawyer for Help

Remember, the journey out of debt is a marathon, not a sprint. Patience, persistence, and professional guidance from an experienced bankruptcy lawyer like Matthew R. Harris can make this journey less daunting and more manageable. 

While bankruptcy does have a significant impact on your credit report and score, it doesn't define your financial future. Understanding how long bankruptcy stays on your credit report, considering alternatives to bankruptcy, and working towards rebuilding your credit can help you navigate this challenging period and set you on the path toward financial recovery. 

His firm, Matthew R. Harris Law P.C., is located in Toronto, Ontario, and works with people throughout Hamilton, London, and Ottawa. Reach out today to learn how he can help you build a brighter future.