{"id":1396,"date":"2020-09-25T16:40:38","date_gmt":"2020-09-25T22:40:38","guid":{"rendered":"http:\/\/gothandcompany.com\/?p=1396"},"modified":"2021-09-07T11:43:44","modified_gmt":"2021-09-07T17:43:44","slug":"will-bankruptcy-or-a-consumer-proposal-clear-my-credit-report","status":"publish","type":"post","link":"https:\/\/gothandcompany.com\/will-bankruptcy-or-a-consumer-proposal-clear-my-credit-report\/","title":{"rendered":"Will This Clear My Credit Report?"},"content":{"rendered":"\n\n[et_pb_section fb_built=”1″ _builder_version=”4.6.4″ _module_preset=”default” custom_padding=”0px||0px|||”][et_pb_row _builder_version=”4.6.4″ _module_preset=”default” custom_margin=”0px||0px||false|false” custom_padding=”0px||0px||false|false” width=”100%” hover_enabled=”0″ sticky_enabled=”0″][et_pb_column _builder_version=”4.6.4″ _module_preset=”default” type=”4_4″][et_pb_text _builder_version=”4.6.4″ _module_preset=”ca0a0b79-8fd3-4d3a-996e-2fa8e87336da” hover_enabled=”0″ sticky_enabled=”0″]

A Consumer Proposal or Personal Bankruptcy Will Clear Up My Credit Report<\/h1>\n

Myth or Fact?<\/h2>\n

Several times a week I get calls from individuals (debtors) who believe that if they go through a consumer proposal or personal bankruptcy their debts will be removed from their credit report and that will make it easier for them to get new credit. This is almost all myth<\/strong>.<\/p>\n

Let\u2019s take a look at what proposals and bankruptcies are intended to do;<\/p>\n

These are procedures in Canadian Federal Law- the Bankruptcy and Insolvency Act, (BIA) designed to enable a person to get a fresh start financially by clearing away most unsecured debts.<\/p>\n

<\/h3>\n

The Basics of a Proposal<\/h3>\n

A Proposal is an offer to unsecured creditors to settle their debts. Usually the debtor offers to make monthly payments for a specified total, and the creditors get to vote on the offer with majority vote deciding. So, if most of the creditors who vote are in favour of the proposal, the creditors who didn\u2019t vote, or voted against the proposal are forced into the deal. Once the proposal payments are completed, the debtor is free of the debt<\/strong>. This does not mean the creditors got paid in full, it means the Law wiped out the ability of the creditors to chase the debtor for payment. For \u00a0example, if a debtor\u2019s \u00a0proposal, accepted by creditor vote is to pay 35% of what is owed, once the 35% is reached, the debtor does not have to pay any more.<\/p>\n

The vast \u00a0majority of proposals end up paying creditors well less than \u00bd of the creditors\u2019 claims<\/strong>.\u00a0<\/p>\n

<\/h3>\n

The Basics of Bankruptcy<\/h3>\n

A Bankruptcy is a different procedure. There is no offer to creditors. The creditors do not get to vote on a bankruptcy. The law dictates what assets and income of the debtor must be gathered by the trustee to be distributed to creditors. In most bankruptcies creditors get nothing or pennies on the dollar<\/strong>. You are free of the debt when you are discharged from bankruptcy.<\/p>\n

Typically proposals are designed to pay creditors more than what they could expect if\u00a0 the debtor chose to go bankrupt otherwise creditors wouldn\u2019t vote in favour of a proposal.<\/p>\n

<\/h3>\n

So What Does a Proposal or Bankruptcy do to Help Clear Up My Credit Report?<\/h3>\n

Nothing<\/strong>. There is nothing in the (BIA) that directly affects or controls credit reports or the actions of credit reporting agencies.<\/p>\n

Credit reporting agencies retain credit information on individuals supplied by the individuals\u2019 creditors. There is an obligation on the credit reporting agency to correct known errors in someone\u2019s records but except for provincial limits on how long information can be retained in a person\u2019s credit report, the completion of a proposal or a discharge from bankruptcy does not force the credit reporting agency to \u201cremove\u201d any mention of the debt<\/strong>. The reporting agency may add to the noted debt that it was dealt with by a proposal or bankruptcy but it can still appear.<\/p>\n

<\/h3>\n

What Will My Credit Report Show?<\/h3>\n

So, assuming a proposal or bankruptcy is completed, what can you expect to appear in your credit report ? You can assume the credit report will provide the information that you went through a proposal or bankruptcy and the date when the proposal was completed or the date you received your discharge from bankruptcy. It can also include\u00a0 comments about the debts that were not paid in full because of the proposal or bankruptcy.<\/p>\n

Here is an example to make my point;\u00a0 If I were part of the team that helped heal you from serious car accident injuries, you wouldn\u2019t expect your driving record to be improved because of our actions, would you?<\/p>\n

A Licensed Insolvency Trustee can assist you in getting free of your debt, but we can\u2019t help you improve your credit report – that is up to you.<\/strong><\/p>\n[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section]\n\n","protected":false},"excerpt":{"rendered":"

A Consumer Proposal or Personal Bankruptcy Will Clear Up My Credit Report Myth or Fact? Several times a week I get calls from individuals (debtors) who believe that if they go through a consumer proposal or personal bankruptcy their debts will be removed from their credit report and that will make it easier for them […]<\/p>\n","protected":false},"author":1,"featured_media":1400,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[130,131],"tags":[],"yoast_head":"\nWill This Clear My Credit Report? - Goth & Company Ltd.<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/gothandcompany.com\/will-bankruptcy-or-a-consumer-proposal-clear-my-credit-report\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Will This Clear My Credit Report?\" \/>\n<meta property=\"og:description\" content=\"A Consumer Proposal or Personal Bankruptcy Will Clear Up My Credit Report Myth or Fact? 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