We live in a credit society. If you disagree, try renting a car, booking a hotel room, or making an online purchase without a credit card. Banks almost force us to use credit since they know that the majority of people will not pay the full balance on their account by the due date, which will generate interest. We are conditioned from a very young age to protect our credit score. It is therefore not surprising that one of our biggest fears regarding bankruptcy or consumer proposal is the impact it could have on our credit score.
How Can A Consumer Proposal Or Bankruptcy Affect Your Credit?
Declaring bankruptcy generates an R9 rating with your credit bureau, and this rating remains there for 6 years after the discharge date for a first bankruptcy, and for 14 years for a second bankruptcy.
A consumer proposal generates an R7 rating which remains on your file for 3 years after the date of your last payment.
The idea is that if you destroy your credit score, you will never be able to get a loan again, or you will have to pay excessive interest rates (for example, on your next car purchase), and you won’t you can ‘ t buy a house.
Will banks give me loans if I declare bankruptcy or file a consumer proposal?
There was a time when the answer was “no”. Back when a small percentage of people had bad credit, banks could afford to ignore them, and they did. Today, an estimated 30 to 35% of the population is experiencing a credit crunch and banks can no longer afford to ignore the market of this magnitude. They then set up “risk loans”. Banks can thus offer loans, usually secured, such as a car loan, to people who have either declared bankruptcy or filed a consumer proposal. These loans have a higher interest rate than prime rates, but they allow you to rebuild your credit.
In truth, credit is easier to repair than you think. LoanPillars Group offers you the most complete restructuring program that exists, as well as exclusive products for our customers who manage to rebuild their credit score to an average or higher level within two years after a declaration of bankruptcy or a consumer proposal. You don’t have to wait for the R9 or R7 to be removed from your file. We start rebuilding your credit the day of your submission.
If an impact on your credit score saves you from $ 50,000 in debt that could keep you in poverty for 58 years or more (read the small print on your credit card accounts), choose then imposes itself.
Your credit score is important, but should not be preserved at the expense of financial decisions that could get you out of debt and get you back on the road to financial health.
I offer you a free consultation of one hour, without obligation. It would be my pleasure to chat with you.