Bankruptcy Proposals and Managing Credit

The bankruptcy process can be difficult and emotionally straining for everyone involved. It might seem like you’ll never be able to recover from the effects on your credit rating, but there are plenty of ways to rebuild your credit after filing for bankruptcy.

What’s the Difference Between Bankruptcy and Consumer Proposals?

Before starting the bankruptcy process, it’s important to know what options are available to you. One common alternative to bankruptcy is a consumer proposal. Consumer proposals are similar to declaring bankruptcy, but there are a few key differences you should be aware of.

What Is Bankruptcy?

Personal bankruptcy is a legal process which can occur when a person cannot afford to repay their outstanding debts. It relieves the debtor of their debts to creditors by using a portion of their assets to repay those debts.

What Is a Consumer Proposal?

Like bankruptcy, consumer proposals offer relief from debts. However, you do not need to surrender your assets in a consumer proposal. Instead, you’ll need to repay a specific amount of the debt that you owe, mainly dependent on your income. 

Which One Should You Choose?

Both consumer proposals and bankruptcy proposals come with their own benefits and downsides. Consumer proposals are less severe than bankruptcy because they do not affect your assets. Still, bankruptcy is often a more suitable choice for relieving debt. 

Your choice will depend on your specific circumstances. A bankruptcy trustee will help you find the best solution for your situation.

How Will Bankruptcy Affect Your Credit Score?

Bankruptcies will remain on your credit report for several years following the initial filing.

Typically, bankruptcies are removed from a credit report about six years after you are discharged, but this number can vary based on several different factors. If you declare bankruptcy more than once, the bankruptcy will be visible on your credit report for fourteen years.

 

Bankruptcy can cause your credit score to plummet by more than 200 points. This lower score means creditors will be less likely to work with you. Fortunately, there are plenty of ways to repair your credit score to signal your trustworthiness to creditors.

Working Closely With a Bankruptcy Trustee

Bankruptcy trustees are experts in the world of bankruptcy and credit, so they’ll be able to help you manage bankruptcy and repair your credit score. At Insta Auto Solutions, we work closely with bankruptcy trustees to ensure you can get through your bankruptcy and emerge with better credit.

How to Repair Your Credit After Bankruptcy

After filing for bankruptcy, one of your biggest concerns will be repairing your credit. Now that your credit score has dropped, you’ll need to bring it back up to prove your reliability to potential creditors. 

 

There are plenty of ways to rebuild and maintain good credit. These are small steps, but over time, they can effectively re-establish your credit rating.

Pay On Time, Every Time

Consistent monthly payments are key when it comes to building your credit. Never underestimate the importance of paying your bills on time–though it might feel like it has little effect on your credit score, it’s monumentally important for signalling to lenders that you can manage your money responsibly.

Apply for a Secured Credit Card

Secured credit cards are a great way to boost your credit score after declaring bankruptcy. These cards require a security deposit that is used if you miss a payment. With a secured credit card, you’ll be able to safely repair your credit score and prove your reliability to lenders.

Keep a Realistic Budget

Always be sure you are living within your means. If you’re spending more money than you’re making, see where you can cut down costs or limit purchases. 

In the meantime, you’ll also need to set aside some savings in case of unexpected expenses. A surprise expense could come up at any time, so it’s critical to be prepared well in advance.

Practice Healthy Money Habits

The best way to build and maintain a good credit score is to practice good spending habits. Once you have established these habits, you’ll find that your credit score only increases over time.

 

Never take out a loan you can’t repay, use your bank account responsibly, and make sensible spending choices. If you find yourself getting behind on payments again, don’t be afraid to ask for help from loved ones or an expert!

Build Your Credit With an Auto Loan

Bad credit? No problem! An auto loan is a fantastic way to rebuild your credit after bankruptcy. Once you have your auto loan, make your payments in full and on time to build up your credit history. Soon, your credit score will be back to normal.

How to Ensure You Can Make Your Payments

1. Set a Reasonable Budget. 

When getting an auto loan, it is critical to consider how much you can afford to pay. Look at your monthly income, consider how much you can dedicate to paying an auto loan, and base your budget on that number.

2. Save for a Down Payment. 

A down payment is a great way to reduce your monthly payments. If you’re unsure if you’ll be able to keep up with monthly payments, it’s better to put down a down payment and pay a portion of the cost upfront.

3. Select a Less Expensive Vehicle. 

When you get a bad credit auto loan, you’ll need to pay a higher interest rate. This is because you are a higher risk to the lender. By selecting a less expensive car, you’ll pay significantly less per month for your vehicle.

Repair Your Credit With an Auto Loan

At Insta Auto Solutions, we are dedicated to helping clients build their credit with auto loans. If you have recently or are currently going through bankruptcy, we’re here to help! No matter what your credit history looks like, our team of experts is ready to find you the perfect vehicle. Contact us today to get started.

 

This is some placeholder text. Please replace this with your own content.

Not finding what you are looking for?

Talk with our sales and finance team, as they can offer a variety of flexible services to help you with special requests!
We understand that the journey to finding the right car can be difficult, you might need to find out what your vehicle is worth and how much of a trade in you will get. Insta Auto Solutions offers a free "Trade in Value" tool here Whats My Car Worth. 

Insta Auto solutions also have a fun and easy to use Car Loan Calculator that you can use to do some initial budgets, Note that more often our team can help with a better rate and payment plan that is fully customized to you. Click here to get our quick and hassle free quote here.
Insta Auto Solutions is passionate about helping clients rebuild their credit and become a long-term customer who grows with us and uses their car loans to rebuild their credit score. Here is more information regarding our approach to credit rebuilding.

Worried about repairs when buying your car? No problem! Insta Auto Solutions offers full service and repair centres to our car customers and the general public serving not only Alberta but western Canada. Get your parts or service quote now!