Why You Need a Bankruptcy Discharge
Please also refer to our blog: Bankruptcy – What is a Discharge.
While you are bankrupt, your position is that of an “undischarged bankrupt.” This means that you have to continue to supply budgets, tax returns and other information to the trustee on an ongoing basis. You are not allowed to apply for a loan, line of credit, bank overdraft, mortgage, etc. for an amount over $500 without disclosing that you are an undischarged bankrupt. The chances of being approved are very poor. If you come into an inheritance or win a lottery while you are still bankrupt, your trustee will have a talk with you about who gets the money. The trustee will explain that an “after acquired asset” is an asset acquired by the bankrupt person between the date that you filed the bankruptcy and the date you are discharged from your bankruptcy. You will not be happy with what you hear. Mortgage companies may renew an existing mortgage (usually at a higher than normal rate) but they will rarely allow you to increase the mortgage nor will they issue a new mortgage to an undischarged bankrupt.
Your discharge from bankruptcy is the start of your recovery and rebuilding of your financial life. You will be able to apply for a credit card or line of credit with a reasonable chance of success. Your trustee will assist you in this process. The credit bureaus (Equifax Canada and Trans Union of Canada) both keep a record of your bankruptcy for 6 years after you are discharged (14 years if it is a second time bankruptcy). The faster you get your discharge from bankruptcy, the faster it will disappear from your history. Translation – it will be easier, faster, cheaper to get a credit card or borrow money for the purchase of a car or house after you are discharged from bankruptcy than it is while you are still in the bankruptcy process.
Contact Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.