Despite the fact Canadians from coast to coast dread the thought of declaring personal bankruptcy, in 2010, almost 100,000 citizens did exactly that.  They emerged from Canada bankruptcy virtually debt free and were able to start their financial lives over with a clean slate. 

In short, there is life after Canada bankruptcy and it has significant upsides.  First, the creditor collection calls and wage garnishments stop.  Second, you have more income to save and spend.  Third, you can sleep better at night.

In most cases, Canadians fear bankruptcy because they do not fully understand how it works and what it might do both for them and to them.  The best place to go for information about bankruptcy is a licensed bankruptcy trustee. 

You can learn a lot on the Internet, but bankruptcy is not the same for everyone who files.  It depends on your own unique circumstances and you cannot get specific answers to questions about your situation on a website.  For that, you have to sit down with someone face to face.  However, in initial meetings with a trustee, most citizens are preoccupied with what happens when they file and sometimes forget about what they can look forward to after bankruptcy.  Here are five things about life after a Canada bankruptcy you need to know:

1. You remain protected from legal collection activity on all accounts included in your bankruptcy.
2. A notation of your bankruptcy remains in your credit file for seven years after your discharge.
3. You can begin to rebuild your credit history as soon as you receive your discharge.
4. While you will be able to get credit after a Canada bankruptcy, it will cost you more.
5. You must always disclose the fact of your bankruptcy if asked on an application or information form.

First, although bankruptcy prohibits your creditors from initiating legal action against you once you have filed, some Canadians continue to get a few calls after they get their discharge from bankruptcy.  How can this happen?

Some creditors who have actually lent you the money end up writing off the debt and then selling the debt to a professional debt collection company.  Often for no more than pennies on the dollar, they sell the right to collect the full amount of the debt to a for-profit company.  It sometimes happens that the debt collection company is unaware of the bankruptcy filing, since the legal notification goes to the original creditor.

If this happens to you, all you have to do is supply the collection company with the notice of your discharge and the listing of your original creditors.  The collection company does not have the legal right to continue trying to collect from you.

Second, when you file for bankruptcy each of your unsecured accounts receives an R9 rating, indicating an account in collection or bankruptcy.  That rating remains for seven years, but the balance owed on each account is reset to zero at the time of your discharge.

Third, you can apply for credit the moment you get your discharge, but it will be difficult to get.  You can rebuild your credit history through secured credit cards and other means.

Fourth, it is true that it is relatively easy to get an automobile loan not long after a bankruptcy discharge.  However, your interest rate could be astronomical.  The truth about credit after bankruptcy is not that you cannot get it, but that the credit you can get costs you so much more.

Fifth, it is not illegal for an organization to ask you if you have ever declared bankruptcy, since the filing is a matter of public record.  This is really the only permanent aspect of bankruptcy – you must always answer “yes” if you are asked whether you have filed on an information gathering form.