# Life After Bankruptcy



## Gue$t (Sep 2, 2011)

I have been discharged for almost a year now, and since I am about to get about $30,000 from my grandparents I feel it is the perfect oppprtunity to set a foundation for building my future ( ie. Mortgage)

I already got a $500 cc from peoples trust, and i know i should work toward obtaining an RRSP loan sometime next year.*

Now I need to find a bank that would work with someone like me. At the moment I am with Scotiabank, but i know that I have no future with them as they dont even want to look at someone with my past eventhough I have a good record with them. (Banks that were included in my bankruptcy were BMO, TD, RBC, and CIBC )*

1st question - what canadian bank would be the best option for someone like me to have a "happy" future with?

I want to start building a relationsip with them by opening the followibg accounts: chequing, saving, RRSP, TFSA.*
Hopefully this will be a good start toward an unsecured RRSP loan next year.*

2nd question - what credit unions offer RRSP loans to someone in my situation?*

I did find that lenditfinancial.com offers personal secure loans but it would take me 3 years to pay it off, and if I was to pay it off early they would charge me Extra fees. In total I would spent $928 on a $2000 loan (a bit too much i think) what are your thoughts on it?

I would appretiate your answers to my questions.*

Thank You


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## Syph007 (May 2, 2011)

You just got done with bankruptcy, and your first decision is to get a loan for RRSP? Have you looked into why that's a good idea? I would never recommend doing that. You screw yourself out of the highest taxed portions of income tax refund if you make bulk rrsp contributions in a single year, vs spread out over more. Youd have to be expecting one heck of an RRSP return to justify paying interest on a loan to fund it. I just cant see why you think that it's a good idea.


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## marina628 (Dec 14, 2010)

If I were you I would look at this $30,000 as an emergency fund and try to rebuild your credit even if it means you have to give a $1000 security to get a $1000 BANK CREDIT CARD.Forget about buying a house until you are out of bankruptcy at least 2 years and have managed to get 3 revolving credit accounts and you know you are disciplined enough to manage them.My house keep has been bankrupt 3 times and it is ridiculous as she earns good money has several sources of earnings but she cant save a dime.


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## MrPolarZero (Aug 13, 2011)

Syph007 said:


> You just got done with bankruptcy, and your first decision is to get a loan for RRSP? Have you looked into why that's a good idea? I would never recommend doing that. You screw yourself out of the highest taxed portions of income tax refund if you make bulk rrsp contributions in a single year, vs spread out over more. Youd have to be expecting one heck of an RRSP return to justify paying interest on a loan to fund it. I just cant see why you think that it's a good idea.



I totally agree. Why get a loan for RRSP after bankruptcy? I really feel bad about what happened to you. Just hope you can recover. Good luck.


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## peterk (May 16, 2010)

Guest, no offence, but it sounds like you haven't learned enough from your previous bankruptcy to hopefully avoid doing it again in the future... The first thing you do when you get cleared is get a credit card? The second thing you do is ask the bank for an RRSP loan? When they say no, for good reason, you then go looking at shady loan websites where you can hopefully convince someone to loan you money????
This is a slippery slope my friend. I think it's clear that questions you ask are not the question that you infact need to be asking, so don't be surprised or offended if you don't get an answer to them from anyone here.

Just to hopefully shut the door on RRSP loans. They are really ONLY a good idea for high income people who get taxed out the ***, and who can get dirt cheap loans because of their amazing credit. For everyone else it doesn't make sense. They're also not meant to be paid off in 3 years, but withing several months of making the RRSP contribution. I'm not going to do the math for you but trust everyone on this forum when we say it doesn't make mathematical or finanical sense for you to do this.

You need to get back to the basics, stop trying to outsmart the system with loans and quick fixes and avoiding the hard work. 
The first thing you need to do is learn how to make a budget. This means that you can NOT spend more than you bring in, and should infact be SAVING some money each month, which will be in your budget.
Next read up on how to set up emergency funds where you can save for life's troubles but still avoid going into crippling debt.

Step 3: You're done! That's it. No car loans, no investment loans, no RRSP loans, no mortgates, no credit. Some may suggest a small credit card to build up your good credit so when you eventually get a mortgage you'll get a reasonable rate. But be careful with it. You shouldn't be rushing to buy a house anyways. Although one of the "smarter" loans, a mortgage is still nothing but a BIG HONKING LOAN to allow you to buy something you can't afford.


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## Maybe Later (Feb 19, 2011)

I think the OP is looking to rebuild their credit ASAP. A secured credit card is one way. A SHORT-TERM personal loan paid off in a few months, like an RRSP loan is another, but I imagine hard to qualify for and expensive as far as the interest rate charged. I agree that using more than one credit card, paying the balance in full each month, might be a good start.


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## the-royal-mail (Dec 11, 2009)

Yes, I too was shocked to hear that the first course of action for someone who just got through with bankrupcty was to immediately start looking for sources of credit. Bad, bad, bad.

A mortgage starting wth $30K? Again, bad idea.

This is the perfect time to start SAVING. You have been given a tremendous gift of $30K at this time in your life. My advice is you use that to set up savings tiers 1 and 2. Keep it in cash.

Next, setup a spreadsheet to keep track of your monthly expenses and set some goals for yourself over the next 1-2 years.

I also recommend you avoid the bank's investment people at this time. I think you are in much too vulnerable position right now to think about investing and paying fees on your money.

RRSPs and loans should be the LAST thing on your mind right now.


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## Plugging Along (Jan 3, 2011)

I agree with the other posters. I think right now, it's about building your financial foundation. I'm not of the reasons you had to declare bankruptcy, but it generally indicates of either lack of financial management or inability to manage lifes risks. Either way, you need to save up money for emergencies and life and develope that foundation without ANY debt.

Loans are going to be expensive for you, as they should be, your record shows that you have been unable to manage in your past. You need to prove them otherwise. The least inexpensive way is a secured credit card in which you pay in FULL EVERY month. I wouldn't worry about any other type of loan right now. Your mortgage rate is going to be very high until you can build up your credit score. One way to look at it, is the extra you will be paying in interest for a mortgage, that would be more than the $30K you have right now. 

I would also ask, what makes you think that only after a year of declaring bankruptcy you would be able to handle a large loan?


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## sags (May 15, 2010)

I will have to disagree with my distinguished fellow forum members.

The advice on savings and budgeting is sound financial advice, but it does nothing to facilitate increasing your credit score, which will remain low until you successfully obtain and manage credit for a period of time.

You need different types of credit to rebuild your credit rating.

One or two secured credit cards of sufficient amounts of $3,000 or more.

An RRSP personal loan is excellent to gain another credit reporting source.

Make all the payments on time. Keep the debt levels less than 20%.

Build emergency savings.

I would recommend discussing your situation with a financial planner from each bank to decide which offer a plan that suits you.


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## the-royal-mail (Dec 11, 2009)

sags, assuming I go along with your valid approach of building up credit, here's why I didn't mention a couple of your ideas:

1. the OP doesn't sound to me like he has learned much, based on what has been posted here. The last thing you want to do is encourage people who can't manage money, to get more credit so they can repeat the mistakes of the past. Of course, I may be wrong on this. I would love to hear from the OP; maybe I've missed the mark.

2. I recommended the OP stay away from a financial planner at the bank, because I don't want them to sell him on "investing" in paying fees on his money (ie. buying expensing mutual funds). If he goes there, you KNOW that's what will happen. These folks are very good salesmen. Based on the aformentioned assumption, what the OP needs is advice and education on how to manage money, not on where to allocate what he has, or to invest in equities or RRSPs.

But yes, you do make a good point about building up a credit score. You do have to start somewhere, I'm just not sure this is the right time for the OP.


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## sags (May 15, 2010)

Oh.......you are absolutely right TRM.

Savings is an absolute must for the OP.

It would not only provide safety against unknown expenses, but demonstrate to future lenders the ability to manage money.

A balanced approach with savings as the main target........and a very small amount of debt to rebuild credit, with savings as an ancillary benefit (TFSA, RRSP), would be the ideal situation for the OP.

I only recommended a bank as they can offer an array of services under one roof that would be useful to the OP, such as a savings account, TFSA, RRSP.

The OP needs to borrow only as little as necessary to achieve the desired results, and while building savings at the same time.

I don't consider any debt as "good debt", only perhaps as "necessary" in the world we live in.


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## marina628 (Dec 14, 2010)

That is why I recommended he save the $30,000 and use a small amount as security on a couple cards.It will help them build credit but at same time limit the debt risk.I hope the OP realizes a mortgage is not the way to go. I would like to see them practice saving and living on the budget while building the credit ,even if they just save $25 a month it means they are living within their means.Also learn to avoid making the same mistakes again and I must give them credit for seeking our money forums like this as it shows they are concerned about their future and trying not to make mistakes again.
God knows I love my Real Estate but sometimes it is cheaper to rent than to buy.Maybe set up a 5 year plan for yourself to have 20% saved plus closing and all the stuff that comes with a house like lawnmower ,curtains , furniture etc.I suspect also it may be first time they have $30,000 in the bank and may feel richer than they are


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## Plugging Along (Jan 3, 2011)

Though I agree that eventually the OP must start to build their credit rating up again... I think the first thing they need to do is build the foundations of money management. Its not clear based on the post if they have actually learned how to manage their money or not. If they can articulate where they went wrong, and how things will be different, and demonstrate it, then starting to build credit is a good step. If they haven't learned anything about credit, then building credit is not where they need to start.


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## Larry6417 (Jan 27, 2010)

I agree that a secured credit card is a good way to rebuild a credit score. A friend-of-a-friend declared bankruptcy several years ago. She rebuilt her credit score by using the card and repaying the full amount monthly. However, I also agree with the criticisms levelled against the OP. Less than a year after bankruptcy the OP wants to take on a mortgage and a RRSP loan!

The OP doesn't tell us why he (she?) went bankrupt in the first place. If the OP doesn't understand that, the chances of it happening again are good. The OP wants to take out a mortgage but doesn't mention whether he can afford it i.e. what's the OP's income, expenses etc. Also, the OP makes no mention of his credit score - which is likely still poor. It can be checked. See www.consumer.equifax.ca/home/en_ca and www.transunion.ca/

A lower credit score generally means a higher rate (if the loan is even attainable). Taking out a loan before repairing one's credit score may not be wise. Also, the OP seems to be asking all the wrong questions. He want to know which bank will work to make him "happy." The answer should be obvious: none of them. He's the financial equivalent of toxic waste right now, even after $30K from his grandparents. Banks will try to make you happy *if* you have the money to make it worth their time. Any bank account, credit card etc will serve to enhance a credit record.

My advice (worth every penny the OP paid for it!):

Figure out why he went bankrupt in the first place. Invest in his (or her) financial knowledge, which can be done easily for the cost of a library card. Look up his credit score and follow the tips provided to increase it. Use the credit card wisely to improve the credit score. Live frugally. Use the lowest cost financial services possible; PC Financial may be a good option. Avoid big financial commitments like a mortgage until the credit score improves. Save the $30K. A TFSA may make more sense at this point since it can easily double as an emergency fund or savings for an eventual down payment. Good luck!


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## Ihatetaxes (May 5, 2010)

I think you should take the $30k and go pay back the companies you defaulted on.

Ridiculous how easy it is for people to walk away from their obligations.


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## Syph007 (May 2, 2011)

Ihatetaxes said:


> I think you should take the $30k and go pay back the companies you defaulted on.
> 
> Ridiculous how easy it is for people to walk away from their obligations.


Agreed! The only consequence is bad credit, so it SHOULD be hard and take time to get a great score again.


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## the-royal-mail (Dec 11, 2009)

Hopefully the OP hasn't been discouraged by our comments as that was not the desired effect.

OP, please come back and reply to the thread you started!


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## Gue$t (Sep 2, 2011)

I appretate your answers (not the one that called me toxic waste) but as I was misunderstood by most let me clarify:

1. Bankruptcy was not my career goal or the easy way out, it was a necessity at the time. But that is something I wouldn't like to discuss; however, I will say that I don't wish the situation that pushed me into bankruptcy upon anyone.*

2. I am not looking to get a mortgage now but in 3 years maybe...

3. Seven months ago I got a job with a great mining company (one of Canada's top 100 employers) meaning I now make great money. Yes, I was lucky there.*

4. The CC I got is secure.*

5. I did learn from my situation and don't want to be in the same situation again.*

6. I do want to start all over again, be "happy" and not be referred to as toxic waste as someone did here. We all deserve a second chance... Don't we?

7. It has been two years since my bankruptcy, one year since I was discharged; therefore I don't think this is sudden and irrational. If it was I wouldn't take my time searching and asking questions.*

8. I DO NEED to repair my credit and that is why I need a loan I could pay off quickly and not have it linger around.*

9. I do understand that $30,000 is not a mortgage, but it is a good foundation to start a relationship with a bank.*

10. The way it is now with over $2,000 in savings each month + $30,000 in a savings account + annual bonus at the end of the year I will have at least $80,000 in two years for a decent downpayment on a small appartment.*

11. To get a Mortgage on that appartment I need to have good credit and a great relationsip with a bank.*

12. And that is my question. What bank is the best to go with for someone like me.*


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## dsullivan1973 (Jan 3, 2012)

*Advice - From one that has successfully been there.*

To the original poster. I can see your logic and I applaud your creativity. I notice many comments are tearing you down. I would like to offer to help lift you up.

In 2007 I went through a bankruptcy as well and am still recovering from some of the many aspects that nobody tells you about. After seeking counsel from some very money savvy friends and local business men this became my course of action.

1. Call capitalOne credit card and send them $300. This gave me a credit card that was easy to manage and never put me in over my head. Slow and steady wins this race. Any amount less than $10,000 is considered minor credit. It still builds your rating.

2. This became a great lesson to me. Go to your nearest "We will approve anybody car lot" and find the least expensive, most fuel economic, vehicle that will work for your situation.

*** This bares special note. The vehicle you buy will have outlandish interest so go for the least expensive, most fuel economic one you can. Be prepared to overcome your own desire to take the one that you love. Three years from now you will be so happy you were strong at this exact point.

3. The most important think I can tell you. PAY ATTENTION HERE!!! as soon as you get your credit card, open a monthy account with Transunion & equifax. An online cheapo access to your credit report.

4. Immediately start reviewing your reports at least once a month and report any errors to your trustee. 

** special note here. many creditors will report your account as included in a bankruptcy but they will not mark them closed or at a $0 balance. They MUST be marked closed and $0 balance because your score is calculated by a computer.

This happened to me and 4 years later there are no records at the creditors of my accounts because they closed them out. That means that when I had the credit bureaus launch an investigation, meaning they send letters to the creditors and wait for responses, the creditors had no records of such accounts and couldn't respond. Since the creditors didn't respond, the bureaus couldn't correct my credit profile. I was stuck in LIMBO.

My advise with the $30,000 would be to invest it, in your TFSA and to focus on Canadian Dividend returning Bluechip stock.

As long as you keep cleaning up your credit profile you will be surprised how soon your bank will offer you a new lower interest loan to pay off your vehicle and TADA you have reestablished descent credit without drowning.

Any comments or suggestion on these topics would be appreciated.
Dave from Saint John.


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