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I am running Ubuntu-20.04 in WSL 2 and use Windows Terminal. I am using the colorScheme "Dracula" and in my local bash everything is displayed perfectly. But as soon as I SSH into a remote machine the default colors are displayed. This makes for example directories very hard to read.

local bash on the left side, ssh into remote server on right side

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I have found a solution. The problem was not the color scheme but that the dircolors were not set. I added the following to my .bashrc file:

eval `dircolors`

This fixed it for me.