What happens after you graduate from the Clean Start program?
Clean Start is a debt relief referral solution that allows you to repay your creditors what you can afford. It comes with a fixed repayment schedule over a period of up to five years.
Upon filing a Clean Start, you stop making payments to your unsecured creditors. You make one payment and creditors are no longer allowed to make collection calls, sue you or garnish your wages to collect on debts included in your graduation.
Once your Clean Start repayment plan gets completed, you receive a Certificate of Full Performance. This certificate shows you have honoured your commitments and completed the program. This is the last formal step in your Clean Start. Your debts are now discharged, and you are not required to make more payments to your creditors. You are free from any legal obligations required of you.
Once completed, you will also receive a final Statement of Receipts and Disbursements which provides a list of amounts each creditor received.
Creditor calls after a Clean Start
Creditors can no longer pursue you for debts included in your Clean Start. If creditors continue to call:
Contact the Clean Start Debt Team, who can contact the creditor;
Advise them that you filed and completed the program.
If necessary, send them a copy of your Certificate of Full Performance.
Tell them to stop contacting you.
If they continue to bother you, you can file a complaint with the government against the collection agency.
Credit score after Clean Start
Your credit score will drop after filing however this is a step necessary to eliminating your debts and the hit to your credit rating is temporary.
When you obtain a new auto loan while in the Clean Start program and you make your payments on time, you should begin to see improvements in your score even during your graduation period.
Every week your performance is reported to the credit bureaus, this is including the date of completion. We recommend checking both your TransUnion and Equifax credit report a month after you finish your Clean Start to confirm your report has been updated correctly. This is important since notification of the completion of your Clean Start on your credit report can raise your credit score 40 to 55 points.
How long will it take to recover after a Clean Start?
Clean Start will be completely removed from your credit report 6 years from the date of filing, or 3 years from completion, whichever comes first.
The maximum time frame for a Clean Start is five years. However, many people shorten this term through various options:
Making a lump sum payment
Offering a shorter term. Most graduation terms range from three to five years.
Making additional payments during the life of the graduation and paying off the graduation early.
Your graduation finishes when your payments are complete. If you pay off your graduation faster, you will receive your Certificate of Full Performance sooner.
Recovery from a Clean Start happens in stages.
Financially, you will begin to recover immediately. Prior to Clean Start you were buried in debt payments. A Clean Start eliminates unsecured debt, with a few legislated exceptions. The result is that enrollment in the Clean Start program improves your cashflow. That means in the first years of your graduation you will have more money in your pocket and less going to repay your creditors.
A balanced budget means no longer living paycheque to paycheque. Most people in a Clean Start find it easier to keep up with living costs, car loan payments and can even begin to set aside some savings in year one.
While your credit score will drop right after filing it will begin to recover even while you are in the program. Obtaining a secured or unsecured credit card during your graduation, and making your payments on time, will help improve your credit score. Your score will also increase once you receive your Certificate of Full Performance which is why it is very important to complete your Clean Start payments.
You should have no issues renewing your mortgage after a Clean Start, as long as you have been making your payments on time.
Here are some tips on what you should do after Clean Start:
Pay your bills on time. Set up automatic payments through your online banking so the due date never passes you by. Late or missing payments will further damage your credit score.
Don’t apply for too many credit cards at once and increase your credit limits slowly. Your credit score falls a little every time you apply for a new loan or credit card.
Pay your credit cards off more than once a month, preferably every time you place a charge. This helps keep your balances low. The lower your utilization rate, the faster your score will improve.