In this guide
What happens to your credit when you file for bankruptcy?
When you file for bankruptcy in Canada, your Licensed Insolvency Trustee files the bankruptcy with the Office of the Superintendent of Bankruptcy (OSB), which maintains a public record of every bankruptcy and consumer proposal filed in Canada. Equifax and TransUnion then update your credit report to show it.
Bankruptcy is one of the most serious negative marks that can appear on a credit report, causing a substantial drop in your credit score once it’s recorded. How far it drops depends on how high your score was to begin with. If you’d already missed payments before filing, much of the damage was likely done.
The bankruptcy shows in the public records part of your report, along with the date you filed. Every account has a rating from 1 (paid as agreed) to 9 (worst), and accounts included in your bankruptcy are marked 9. Credit cards show as R9 and loans as I9.
Source: Equifax Canada – Consumer Credit Report User Guide
How long does bankruptcy stay on your credit report?
A first bankruptcy appears on your credit report six to seven years after discharge, depending on your bureau and province. A second bankruptcy reactivates the first bankruptcy on your credit report, and both appear for 14 years each from their respective discharge dates.
| First bankruptcy | Second bankruptcy |
|---|---|
| 6–7 years after discharge | 14 years for each bankruptcy. |
You can’t remove a bankruptcy from your credit report before then. The clock runs from your discharge, which is one reason getting discharged on time matters. Here’s how long a bankruptcy itself lasts.
On Equifax Canada credit reports
Equifax removes a first bankruptcy six years after the discharge date. If no discharge date is recorded, it’s removed seven years after the date you filed. If you file a second bankruptcy, both appear for 14 years after their discharge dates.
Source: Equifax Canada – How long does information stay on my credit report?
On TransUnion Canada credit reports
TransUnion keeps a first bankruptcy six or seven years from the discharge date, depending on where you live. It’s six years in British Columbia, Alberta, Saskatchewan, Manitoba, Nova Scotia, New Brunswick, Yukon, the Northwest Territories and Nunavut. It’s seven years in Ontario, Quebec, Prince Edward Island, and Newfoundland and Labrador.
| 6 years from discharge | 7 years from discharge |
|---|---|
| British Columbia | Ontario |
| Alberta | Quebec |
| Saskatchewan | Prince Edward Island |
| Manitoba | Newfoundland and Labrador |
| Nova Scotia | |
| New Brunswick | |
| Yukon | |
| Northwest Territories | |
| Nunavut |
A second bankruptcy stays on your TransUnion report for 14 years from each discharge date.
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What about a consumer proposal?
A consumer proposal disappears from your credit report faster than a bankruptcy, although the proposal itself usually takes longer. Your payment is set at what you can afford over up to five years, so the less you pay each month, the longer it takes to finish.
On Equifax, a consumer proposal is removed from your credit report 3 years after you pay it off, or 6 years from the date you filed, whichever comes first.
Source: Equifax Canada – How long does information stay on my credit report?
What happens to your credit score after bankruptcy?
Your credit score will drop when you file for bankruptcy. How far it falls depends mostly on how high your score was to begin with, and on how much of your available credit you were using. A higher starting score has further to fall.
Once you’re discharged, you can start rebuilding your credit. You know your discharge date in advance, so you can plan your financial recovery accordingly.
As you rebuild, remember a good score alone doesn’t get you approved if you can’t afford the payments. Lenders want to see that your income comfortably covers your debts (debt-to-income ratio). Lenders also consider your employment status, expenses, banking history, and alternative data sources to assess your creditworthiness.
How to rebuild your credit after bankruptcy
The best way to rebuild your credit score after bankruptcy is to demonstrate responsible borrowing through on-time payments. Payment history is the single biggest factor in your score, accounting for approximately 35% of your total score.
Source: Equifax Canada – How are credit scores calculated?
A secured credit card is a great starting point. You put down a deposit that sets your limit, which makes approval easier after a bankruptcy. Use it for small purchases, pay it off in full each month, and this positive information will be sent to the credit bureaus. Learn more by reading our guide on getting a credit card after bankruptcy.
Pay every bill on time. A payment that’s more than 30 days late is reported as late, and this information will appear on your credit report. Check your report regularly and dispute any errors with Equifax or TransUnion. You can get a free copy from each bureau.
Will bankruptcy ruin my credit forever?
No. A first bankruptcy falls off your credit report six to seven years after discharge, and your score will rise once it’s gone so long as you keep making future payments on time.
You don’t have to wait that long to see progress. With a secured card and steady on-time payments, your score can start climbing within months of discharge, helped by the fact that the debt itself is gone.
Frequently asked questions
How long does a bankruptcy stay on your credit report in Canada?
A first bankruptcy appears for six years after discharge on Equifax, and six or seven years on TransUnion depending on your province. A second bankruptcy stays 14 years from each discharge date.
Can I get a bankruptcy removed from my credit report early?
No, not if it’s accurate. Only incorrect information can be removed. A bankruptcy remains on your credit report for the full period of time and will automatically drop off afterward.
Equifax shows a bankruptcy I never filed. What do I do?
Dispute it with Equifax right away. If the record is wrong, they have to investigate and correct or remove it. Get your report from both TransUnion and Equifax, since an error on one can appear on the other.
Does bankruptcy stay on your report forever?
No. It’s removed automatically after six to seven years for a first bankruptcy or 14 years for a second bankruptcy.
Is a consumer proposal better for my credit than bankruptcy?
Often, yes. A consumer proposal is removed from your credit report three years after you finish paying it, or six years from filing, whichever is first.
When can I start rebuilding my credit?
As soon as you’re discharged. A secured credit card and on-time payments are the quickest way to rebuild, and progress often shows within a few months.
Who can I talk to about bankruptcy in Canada?
A Licensed Insolvency Trustee can explain how a bankruptcy or a consumer proposal would affect your credit, and which is best for you.
At Moses Advisory Group, our Licensed Insolvency Trustees have helped thousands of Canadians resolve their debt problems with free, impartial advice.
If you need debt help or are considering bankruptcy or a consumer proposal, speak with us for free via video, phone, or in person. We will explain your options and help you find the right solution for your situation.