How Long Does a Bankruptcy Stay on my Credit Report?

Posted in Personal Bankruptcy
Posted by J. Douglas Hoyes, CA, CPA, LIT, CIRP, CBV

how long does bankruptcy stay on credit reportI am often asked how long a bankruptcy or consumer proposal remains on a credit report.

In Canada there are two large credit reporting agencies, or credit bureaus, Equifax and Trans Union, and they each report bankruptcies and proposals differently.

On Equifax’s web site they state that “A bankruptcy automatically purges six (6) years from the date of discharge in the case of a single bankruptcy. If the consumer declares several bankruptcies, the system will keep each bankruptcy for fourteen (14) years from the date of each discharge. All accounts included in a bankruptcy remain on file indicating “included in bankruptcy” and will purge six (6) years from the date of last activity. A consumer proposal is automatically purged from your credit report three years after the last payment is made.

On Trans Union’s web site they state that information is maintained on your credit report “for as long as your information is relevant to an organization making a decision about an application you have supplied… However, provincial credit reporting legislation outlines maximum reporting lengths for information that is negative. Therefore, TransUnion will not maintain negative information on your credit file longer than what is permitted by provincial credit reporting legislation.”

In Ontario, credit reporting is governed by the Consumer Reporting Act which states, in subsection 9 (3) (e), that a consumer reporting agency shall not include in a consumer report “information as to the bankruptcy of the consumer after seven years from the date of the discharge except where the consumer has been bankrupt more than once.”

In other words, Equifax automatically deletes a first bankruptcy six years after the date of discharge, whereas Trans Union leaves the bankruptcy on your credit report for seven years after the date of your discharge. For both agencies, a notice that you filed a proposal should be removed 3 years after your proposal is completed.

Path to Credit Recovery

If you are avoiding talking to a bankruptcy trustee because you are concerned about how your credit will be affected, it’s important to consider two factors:

  1. If you have bad credit today, bankruptcy or a consumer proposal can be a step in repairing your credit history because it eliminates debt you may otherwise not be able to pay. Even if you think you have good credit, your ability to obtain a new loan may be negatively affected if you carry too much debt.
  2. It is important to note that your credit report is only one element lenders use to decide if they will let you borrow money. They are also interested in your income, job stability, assets, and perhaps co-signers. By saving money and paying your regular monthly bills on time, it is possible to gain access to credit in less than seven years after your bankruptcy has ended.

bankruptcy and credit report