If I Go Bankrupt, Will My Bankruptcy Prevent Me From Ever Being Able To Borrowing Again?
As a licensed trustee in bankruptcy in Ontario, Canada, I meet with hundreds of people each year who are in serious financial difficulty, but they don't want to go bankrupt because they are afraid they will never be able to borrow again. The vast majority of people I meet with are honest, hard working people who have experienced a life altering event, such as a job loss, marriage break-up or medical problem. They used credit to survive, and now they have more debt than they can handle. In many cases they need to declare personal bankruptcy to get a fresh start. People who live in Ontario are no different than people who live everywhere else: one of their financial goals is to one day own their own home, and they worry that if they declare bankruptcy, they will never be able to borrow again. They worry that with a personal bankruptcy on their credit report they will never qualify for a mortgage. When people raise the issue of borrowing after personal bankruptcy, here's what I tell them: First, if you already have more debt than you can handle, if you don't deal with your debts you will never be able to borrow again, whether you go bankrupt or not! If you are so far behind on your bills that collection agents are calling, your credit rating may already be damaged beyond your ability to fix it on your own. If you are already being hounded by bill collectors, a bankruptcy filing may actually, over time, improve your credit rating by eliminating your debts and getting you back on track financially. Second, I tell them that your ability to borrow is based on many factors. Obviously your credit report is one of those factors, and so obviously filing personal bankruptcy will have a negative impact on your credit report, and your ability to borrow. However, there are factors other than what's on your credit report that lenders use to make the lending decision. They also consider your income, job stability, and the amount of a down payment you can contribute to the purchase. For many people, that's the key: if after bankruptcy you can save money, instead of using all of your extra cash to service your debts, you have a great chance to save enough for the down payment on the car or house you want! Over the years I have served as the trustee in thousands of personal bankruptcies, and many of those people have learned to manage their money wisely, save money, and go on to finance the purchase of a car or a house. Your ability to borrow again after bankruptcy depends primarily on your ability to save money, so if you do go bankrupt, use it as a fresh start to get back on track. financially. J. Douglas Hoyes is a chartered accountant, licensed trustee in bankruptcy, and co-founder of Hoyes, Michalos & Associates Inc., one of Ontario, Canada’s largest personal insolvency firms helping people understand bankruptcy, and all of their bankruptcy alternatives. Visit http://www.hoyes.com for information about bankruptcy and bankruptcy Ontario. | |
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