Bankruptcy: Rules of the Game

Like all issues related to good or bad credit, credit activity remains on your credit bureau for 6 years with Equifax, and 7 years with Trans Union Credit Bureau.  

I am frequently asked the question, “Can I get a mortgage having gone bankrupt?”  The answer is yes, providing the following criteria are met.

Insurers like Canada Housing and Mortgage Corporation (CMHC) and G.E. require that you can qualify for a mortgage after completing a minimum of 2 years time following your discharge date.  Check your Certificate of Discharge papers for your date.  Also, you must have re-established credit.  This is not a car loan that you had before/during your bankruptcy.  “Re-established” means new credit.

Below are a couple of recommendations:

1. The longer you wait after the 2 year period, the better your chances of qualifying.

2. Having re-established credit with a Capital One secured credit card (or Home Trust Visa, etc.) with a $500.00 limit won’t cut it.  If you are able to get a secured credit card, try every 6 months to increase the limit, up to to $1000.00 or even $2000.00.  Just don’t use it too much and be sure to never have a late payment.

2. If you ever have a late payment while your bankruptcy information remains on the credit bureau, you are out of luck.

Next time I will discuss a few bankruptcy “horror stories” so you can avoid them in the future.  For more information on bankruptcy in Ontario, please click here.