How can I rebuild my credit after my bankruptcy in Manitoba is done?

Several factors will determine how quickly you rebuild credit after your bankruptcy in Manitoba is done and, in turn, your ability to borrow money.

It will be impossible to get a loan if you are an undischarged bankrupt; however, if you have been discharged, a lender may take your application into consideration. It will be harder in this case than if you have never filed bankruptcy before.

There are various other factors that lenders will want to look at, including your monthly income, how long you’ve lived at your current address, your work history, and whether you have adequate security for the loan. A co-signor may also be required.

The following are some suggestions for repairing your credit after bankruptcy.

Most importantly, save money! During the time you were bankrupt, you were responsible for making a contribution to your bankruptcy estate, by paying the trustee a sum each month. Since you are now used to living without that money, start putting money into a separate bank savings account each month.

Next, once you have saved up some cash for emergencies in the bank, you could think about using some of your savings to get a secured credit card. As an example, if you give the credit card company $1,000 as a security deposit, they will probably give you a Visa card with a $1,000 limit. Your credit card works just like a regular credit card. It even shows up on your credit report! This is an important step to repairing your credit. More information on secured credit cards can be found here: http://www.moneyproblems.ca/SecuredVisa.htm

Third, as you continue to save money from month to month, (and pay off your new credit card in full every month), you could invest your next say $700 of savings in an RRSP. With a secured credit card and money already invested in an RRSP, it is possible that your bank will lend you a further $500 to invest in your RRSP. You now have $1,200 in your RRSP, and your tax refund may increase by $500 because of your RRSP contribution. You can use your tax refund to repay your RRSP loan!

Now, your credit report shows a credit card in good standing, an RRSP loan that you have paid in full, and you have $1,200 in an RRSP. You are now well on your way to repairing your credit!

Finally, continue to save. Once you have another $1,000 or $1,500, you can probably use that money as the down payment on a car.

You can’t repair your credit right away, but if you continue to save money, and follow the steps listed above, you can gradually rebuild your credit after your bankruptcy in Manitoba in done.