Must your credit rating be protected at ALL costs?
We live in a society of credit. Don’t agree, try renting a car, checking into a hotel or making an on-line purchase without a credit card. Banks almost force us to use credit because they know a large percent of people will not pay the account in full when due and therefore interest will accrue. We are conditioned from a very early age that it is important to protect our credit rating. It’s no surprise then, that one of the huge fears around Bankruptcy and Consumer Proposals is that they impact your credit rating.
How does a Consumer Proposal or Bankruptcy affect Your credit?
Filing a Bankruptcy creates an R9 on your credit bureau which remains there for six years after date of discharge for a first Bankruptcy and fourteen years for a second.
A Consumer Proposal creates an R7 and remains for three years after date of last payment.
The implication is that if you ruin your credit rating, you will never be able to borrow again or you’ll be forced to pay predatory rates (such as the next time you want to buy a car) and will be prevented from buying a home.
Will banks lend to me if I go Bankrupt or file a Consumer Proposal?
There was a time when the answer was ‘no’. When only a very small percentage of people had bad credit, the banks could afford to ignore them and they did. Today, it is estimated that thirty to thirty-five percent of the population is in Credit Crisis and the banks cannot afford to ignore a market this size. So, they created ‘Sub-Prime Financing’. This is where they offer loans, usually secured, such as a car loan, to people who have filed either a Bankruptcy or a Proposal. These loans are at higher than prime lending rates, but there is the opportunity to rebuild your credit.
The truth is that credit is easier to repair than most people realize. The 4Pillars Group offers the most comprehensive credit rebuilding program available and has products exclusive to our clients that usually can rebuild your credit rating to average, or above, in about two years after filing a Bankruptcy or Proposal. You don’t have to wait until the R9 or R7 is off the bureau. We begin rebuilding your credit rating the day you file.
If a hit to your credit rating means saving yourself $50,000 in debt, which would keep you in relative poverty for 58 years or longer (read the fine print on your credit card statements), then the choice is obvious.
Your credit rating is important but should not be preserved over financial decisions that could get you out of debt and put you on a more solid financial path.
I offer a free, one hour consultation, without obligation. I’d be happy to speak with you.
About the Author:
Chris Grew operates the 4 Pillars Consulting Victoria office helping consumers to get out of debt , dealt with debt related problems, and to establish debt restructuring plans that take into consideration the long term financial goals of his clients.
