Life after debt

2023-11-14  4 minute read

Lifestyle Debt

Financial Literacy Month: Part 10 of a 10-part blog series on your financial well-being?

Throughout November, consult this series of blog posts to learn more about your current finances — and how to set yourself on a path to financial freedom.


You’ve been through one of the biggest financial challenges of your life. Overwhelmed by debt you couldn’t manage on your own, you made the choice to meet with a Licensed Insolvency Trustee. After reviewing your finances, they guided you through the journey of filing for Bankruptcy or submitting a Consumer Proposal.

It’s not a position anyone wants to find themselves in, but most people share feeling a great sense of relief when they finally start the process, and the harassing phone calls from creditors stop ringing. You’ve made your monthly payments, stayed true to your duties, and you’ve at last been released from your Bankruptcy or Consumer Proposal — debt-free.

Congratulations. You worked hard to get here. But the work doesn’t end now. You must use the tools you’ve gained and the lessons you’ve learned to make sure you continue living a life of financial freedom.

How to stay debt-free

Getting free of debt through Bankruptcy or Consumer Proposal is a big deal. But staying free of debt is even bigger. The good news is you have the tools, experience, and lessons to live a debt-free life.


Making a budget is one of the most important tools you have to manage your finances. Track your income and expenses on a monthly basis. Groceries, gas, utilities, birthday presents, entertainment, extracurricular activities for the kids — put all of your monthly expenses into your budget. Determine how much your household makes every month and what your expenses are and then make sure you don’t overspend. Budgets work best when put into a spreadsheet and kept up to date from month to month. Use MNP’s budget tracker and other helpful tools. And don’t forget to include savings in your budget.


In addition to your monthly expenses, you will have unexpected costs that arise from time to time. If you own a home, expect to upkeep your house. Appliances cost hundreds to thousands of dollars. You’ll have a furnace and water heater to maintain. Speaking of repairs, any vehicles you own will present a never-ending need for costly repairs. Putting these expenses on credit is a habit that will lead to more debt over time.

You also want to plan and prepare for rainy-day scenarios like unexpectedly losing employment. It’s not ideal but it can happen in an unpredictable economy. Budget room to make monthly contributions to your savings. In the long term, this can be great for vacations, retirement, or postsecondary education costs for your children. In the short term, you’ll be able to draw on it for rainy-day expenses.

Rebuilding your credit

After being discharged from your Bankruptcy or Consumer Proposal, dedicate yourself to rebuilding your credit. While you’re waiting for your credit score to bounce back, get prepaid credit cards and make all of your payments on time. Even after your credit rating is clear, continue to keep your credit cards at zero.

Success stories

MNP has a long history of helping people through the process of Bankruptcy or a Consumer Proposal on their way back to life after debt.

Take Dale for instance. Dale went through the pain of a marital separation and was ready to start a new life. His finances were in a disastrous state as he was faced with more debt than he could overcome on his own. He got in touch with a Licensed Insolvency Trustee at MNP and they worked with him to face his financial hardship. Dale’s trustee guided him through the process of filing for Bankruptcy and he was discharged debt-free. Even better, he felt more prepared to handle his finances moving forward. As Dale, put it, “I definitely know that my money acumen is greatly enhanced after the experience.”

Eric and Robin went to MNP feeling a lot of guilt and shame over their financial hardship. MNP’s Licensed Insolvency Trustee told them there was no point beating themselves up about it when there were clear solutions. So together, they went to work on preparing a Consumer Proposal. Eric and Robin’s trustee evaluated their finances, and within a matter of days, they put their plan into place and the harassment was over. They made their monthly payments through a simple automatic withdrawal. Some creditors even tried to get around the proposal but a quick call to their trustee ended the attempts right away. Before they knew it, they had fulfilled all their duties of the Consumer Proposal and were ready to move on, debt-free, and start rebuilding their credit. As Eric and Robin put it, “We have our lives back.” 

Read about more success stories from people who worked with MNP to get out of debt and experience a life of full financial freedom.

Back to Bankruptcy or a Consumer Proposal

Just like there are success stories, there are also cases where people who have successfully been discharged from Bankruptcy or a Consumer Proposal fall back into debt. If you find yourself in a position where you have struggled with your finances to the point that you have unmanageable debt once more, then you may need to consider a second Bankruptcy or Consumer Proposal.

Filing for a second Bankruptcy

The good news is there is no limit on how many times you can file for Bankruptcy. The conditions are mostly the same — you must owe at least $1,000 and be in a financial position where you’re unable to pay your debt. The only difference with multiple Bankruptcies is that you must also already be discharged from your previous Bankruptcy.

Filing for multiple Bankruptcies will become more challenging each time. The long-term effects will start to add up with every Bankruptcy, making it harder for you to rebuild your credit and acquire any large assets or property. Unlike your first Bankruptcy which affects your credit for six to seven years, a second Bankruptcy will remain on your credit score for up to 14 years from your discharge date.

Learn more about filing for multiple Bankruptcies.

Entering another Consumer Proposal

Unlike a Bankruptcy, the conditions and consequences of multiple Consumer Proposals are no different from the first. You will still work with your Licensed Insolvency Trustee to put a proposal together to submit to your creditors who will vote on whether or not they accept the Proposal. Once they have voted to accept it, you will begin making your monthly payments for a discharge period outlined in your proposal.

It will remain on your credit rating for the same amount of time, three years after your Certificate of Full Performance or six years from when the proposal was filed, whichever comes first. You will have to have a Certificate of Full Performance from your first proposal before submitting a second, otherwise the process will be the same. Find out more about filing for a second Consumer Proposal.

Of course, the point is to stay out of debt and avoid another financial fallout. It’s good to know that filing for a second Bankruptcy or submitting another Consumer Proposal is possible, but that’s definitely a worst-case scenario. Something helpful to make sure you don’t end up falling back into debt is becoming aware of the warning signs.

Early warning signs

If you think you’re headed back toward having unmanageable debt, here are some signs to look out for. More importantly, actively work to avoid these behaviours and you should stay on track for a life of financial freedom after debt.


No matter how much money you make, overspending can get out of control fast. It doesn’t matter if you make 30k a year or 100k a year, if you spend more money than you make, you’re going to end up in debt. It’s become easier to slip into overspending than ever before. With credit cards and lines of credit, you can lose track of how much money is going out the door and how much debt is piling up. And services make it easier than ever. Meal delivery, driving services, streaming, and other subscriptions through gaming and entertainment are available at the click of a button. It’s easy to lose track of not only what you’re spending you’re money on, but how much and how fast. Look at this case study on overspending.

The key to beating overspending is knowing your income and expenses. All of it. The key to knowing about your income expenses is making a budget, sticking to it, and keeping it up to date every month.

Credit debt

Okay, So you’ve worked hard to restore your credit rating and now you can get all the credit you want. Good news, right? Not exactly. Losing track of your credit is one of the fastest ways to fall back into debt. Multiple credit cards and lines of credit will be a warning sign that you’re at risk of debt. Even more troubling, if you’re just paying the minimum and not bringing your credit to zero every month, then sooner or later any payments you make will be cancelled out by the interest you get charged each month. Even if you do put money against your card, your debt will still add up.

The key to keeping a handle on your credit is to pay it down to zero every month. Minimize how much credit you have and only use it when necessary. And when you do use it, pay it off right away before the interest starts adding up.

Financial freedom

In today’s economy, it’s harder than ever to maintain a strong financial foundation. Employment is unpredictable. The cost of living is getting higher every day. And putting yourself in the position to buy a vehicle, or home, or make any investments for retirement feels more out of reach than ever before. You have support. Licensed Insolvency Trustees can help you make the best decisions on how to manage debt. MNP tools can help you maintain a debt-free life. And you take all the tools, lessons, and support with you as you get closer and closer to a life of full financial freedom.

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