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Rebuilding Your Financial Life After A Bankruptcy or Consumer Proposal Is Easier Than You Think

After consulting with people for over 15 years regarding debt solutions, and providing counseling services as a Registered Insolvency Counselor through CAIRP (Canadian Association of Insolvency and Restructuring Professionals) for almost as long, I have helped people rebuild and have taught people how to reestablish credit after filing a bankruptcy or consumer proposal.

At A. Farber & Partners, one of our main objectives – which sets us aside from our industry counterparts – is our large emphasis on teaching people how to rebuild during a bankruptcy or consumer proposal.

As part of the bankruptcy or consumer proposal process, bankrupts or debtors will be required to attend two financial counseling sessions. The purpose of these sessions will help someone understand the causes of the bankruptcy or consumer proposals, and will help assist in managing finances in the future. A big part of these key components will be ways to reestablish credit.

Recovery takes time, but it’s not as difficult as someone may think. Remember, after going through a bankruptcy or consumer proposal, you’ll likely be debt free, which is extremely inviting to many different creditors, as the credit industry has become extremely competitive over the years. In addition to someone’s credit rating, creditors will also look at the fact that you are debt free, your employment situation may be good, and your possible savings. These other elements may make someone look very attractive.

Tips to rebuild your credit

Some of the tips that would be encouraged to begin rebuilding your credit are as follows:

  • Getting a new bank account where no money is owed
    It may sound obvious to some, but it’s important to reestablish a new relationship with a new financial institution. This new bank will see your most recent history, i.e. pay coming in on a regular basis, funds in your bank account, and other monthly expenditures coming out of your account on a timely fashion. Regular payments will help demonstrate that you are now managing your money;
  • Pay your monthly bills on time
    This includes phone bills, cable bills, internet services, and financed or leased car loans. If you make these bill payments regularly, it’ll help improve your credit rating, and show to other creditors, that you are current with your ongoing expenses;
  • Get a secured credit card
    This is the same as a credit card, except it is protected by your own money. When you make your monthly payment for the card, the information regarding your monthly payments will be sent to the credit bureaus each month. A positive history with no missed payments, will help improve your credit score, and show other creditors, that you are a positive risk;
  • Pay your credit card balance in full and keep your balance low
    It’ll be easier to pay your balance in full each month, if you just use your card for small purchases. Small purchases have the same positive effect on the credit bureau as large purchases. If you make large purchases, they can become extremely costly if you miss payments, plus it will negatively impact your credit score should you not make the minimum payments.
  • Get a secured investment – There are now companies which offer a monthly payment plan on investments, and report your monthly payments to the credit bureaus. This is a great way to improve your credit score and own an investment at the end of the term.