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December 2012 - Role of credit bureau.

Role of credit bureau.

☳ by Adam Aspilla

Debt collectors use Credit Bureau as one of their effective tools to collect delinquent accounts. They threaten a debtor that if payment is not made immediately, his/her delinquent account will be reported to the Credit Bureau, ruining the credit rating of a debtor.


Many times, upon hearing the name "Credit Bureau" a debtor moves heaven and earth to secure funds needed to pay the account in arrears in order to protect his/her credit rating. However, there are times where a debtor could no longer generate funds, as a result he/she could be forced to file for consumer proposal, or bankruptcy as a last resort. When you are behind on your payments it will adversely affect your credit rating. As a consequence, you may have difficulty securing credit in the future.


It is a standard operating procedure for financial institutions to secure a copy of your Credit Bureau file before making a decision on your application for credit. Your file in the Credit Bureau is a helpful tool in arriving a decision as to your credit worthiness, for it reflects your paying habits.


Only your debts from merchants and credit grantors who are members of Credit Bureau are reflected in your Credit Bureau file, your debts from your friends or private individuals or companies who are not members of the Credit Bureau do not necessarily reflect in your Credit Bureau record. A good example is your personal loan from a friend or relative.


Records in your Credit Bureau file will remain for number of years. If you filed for bankruptcy for the first time, your file in the Credit Bureau will be kept for a maximum of seven years, while for multiple bankruptcies, it will be kept for 14 years or even more.


After the passage of those years, your debts, whether paid or not will be removed from your file. Some thought that when those unpaid debts are no longer in the Credit Bureau file, they are deemed paid. The said assumption is inaccurate.


In fact, there are people whose wages, bank accounts, and properties are seized by creditors on debt of more than ten years old and were already removed from the file of the Credit Bureau.


One case was a man who had outstanding judgment against him, but, because he changed his address several times and changed employments, he could not be traced. Finally, his creditor tracked down his employment and enforced the wage garnishment order by the court of law.


Credit Bureau's keeping or removing of your debts and payment record on your file has nothing to do with your contractual obligations with your creditors. For as long as you have not satisfied your obligations provided for in your agreement with your creditors whether it is recorded or not in the Credit Bureau, your creditors keep the right to collect the unpaid portion of your debts.



Adam Aspilla is a Senior Financial Counselor of the Debt Clinic of Canada Inc. and the author of the book, You Can Negotiate All Your Debts. He also writes a biweekly column, “What Matters In Life” in “Taliba Newspaper. For free initial, professional and confidential consultation, please call 905-306-7572.