You’ve just gone through 9 months of being an undischarged bankrupt in Canada. Now what?
First, Make Sure You’re Really Discharged!
First, you need to be 100% sure that you are discharged from your bankruptcy. If you haven’t yet received your Certificate of Discharge (also known as an Absolute Discharge) from your trustee in bankruptcy, you soon will. That is, if everything went well. It usually does. As long as you made all of your monthly payments to your trustee on time and your bankruptcy was not opposed by anyone. First time bankrupts are eligible for an automatic discharge after 9 months. In the event you don’t receive your Certificate of Discharge over the next few weeks, contact your trustee.
Once you get that Certificate of Discharge, take a big sigh of relief! The good news is, all of your old debts are now wiped out. The bad news is that your credit rating just took the biggest hit it will likely ever have. That is, unless you file for bankruptcy again.
Your Credit Report Likely Has Lots of Incorrect or Outdated Information Now
It’s quite common for credit reports to have incorrect or outdated information. If you’ve never seen a copy of your credit report, you’ll likely be in for a big surprise! But the good news is that you can start improving it right away by sending a copy of your Certificate of Discharge to each of the credit bureaus. In Canada, we have two of them: Equifax and TransUnion. It’s your responsibility to make sure that your credit reports are accurate, and there’s no better time to start than right now!
Start Cleaning Up Your Credit Report Now – It Can Take A While!
The worst thing to do is to just sit back and wait another 6 years for all of that information to fall off your credit report. Take care of it right away! Unless you plan on living somewhere that has no contact with the outside world, you need to get started as soon as possible with correcting and rebuilding your credit. And contrary to popular belief, it doesn’t take 6 or 7 years!
How do you know what errors are on your credit reports? You will need to obtain a copy of each one. For the impatient, they can be downloaded online for a small fee, payable by credit card. But since you’ve just been discharged from your bankruptcy, you probably don’t have any credit cards. You’ll either need to get someone else with a credit card to buy them for you, or order get them for free through the mail, delivered by Canada Post. See the Equifax Canada Inc. website and the TransUnion Canada websites respectively. In each case, a PDF can be downloaded, printed and sent off to request your free credit report.
If you order online, you will be also be able to receive your FICO credit score. The credit report shows your trade accounts and the score is a number based on a wide variety of criteria (too much to list here). Your credit score is likely a very low number at this point. If you are able to obtain your FICO credit scores, keep track of them as you will see them go up (probably quite a bit) as you get the errors corrected on your credit report.
You MUST send Equifax & TransUnion a Copy of your Certificate of Discharge
If you’d rather save the hassle and skip the request for your credit reports and scores for now (because chances are pretty good that they have errors anyways), just send Equifax and TransUnion a copy of your Certificate of Discharge straight away. Ask them to update your credit profile with this new information and make sure that all of your debts that were discharged in the bankruptcy are reporting as such, and have a zero balance. In many cases, the accounts will now be closed. You will also need to include copies of your current identification, such as a driver’s licence (with your correct address), a passport and a birth certificate are good forms of ID to use. It’s a good idea to include copies of a few recent bills that show your current address.
You could fax these, but if you want to be sure the documents are received and read, it’s best to mail them in. Use ExpressPost to ensure faster and more reliable deliverability. Don’t use regular mail. If someone gets a hold of that envelope, they could cause some serious identity theft. If you send a fax and also mail your documents in, you have a better chance that at least one of them will be received. You have no control over the quality of copies on the fax machine at the other end. If your copies are not clear and legible, they won’t be processed. Remember, yours won’t be the only request the credit bureau receives that day. It will be one of many. That’s why you want to make it as easy as possible for them by providing clear copies, preferably by mail. Even still, with the high volume of requests the credit bureaus get, it’s likely that there will still be a few errors on your credit reports. A second request may be necessary.
In Canada we have two Credit Reporting Agencies
Equifax is the biggest and most popular credit bureau. It has one office serving all of Canada. It’s located in Montreal, Quebec. TransUnion is a smaller credit bureau but has two offices: one in Laval, Quebec which serves the province of Quebec and another one in Hamilton, Ontario that serves the rest of Canada.
Following Up on the Corrections & Updates to Your Credit Reports
Once you’ve mailed in your corrections and a copy of your Certificate of Discharge, wait at least 20 business days, or 30 calendar days. Then order your credit reports and see what’s showing up on them. If there are still some errors, you will once again need to send off copies of your Certificate of Discharge, your ID and copies of recent bill statements along with a letter that clearly mentions each of the items that needs to be corrected.
After another 20 business days, or 30 calendar days have passed, you can check your credit reports and scores. Be sure to order only from Equifax and TransUnion. There are other places that will sell you your credit scores, but they are not the genuine FICO scores and will be different. In the Canadian lending and credit world, the genuine FICO scores are the only ones that count. Plus, some unscrupulous companies may automatically sign you up for a monthly identity theft insurance when you buy your “scores” online. It’s buried in the fine print, but most people don’t read that.
Cleaning up and correcting your credit profile can be a time consuming process, so it’s best to start it right away, as soon as you get your Certificate of Discharge. As the errors are removed, you will see your credit score start to improve. There may be a sudden jump initially. Don’t stop there. Now it’s time to build and maintain your good credit. It’s much too lengthy of a topic to discuss here. You know what your next step is now, so go get your credit report cleaned up!