How Long Does Bankruptcy Last?

The length of bankruptcy in Canada is determined by the Bankruptcy and Insolvency Act. How long a bankruptcy lasts for Canadians is affected by several key factors including whether you have filed for bankruptcy in the past, your surplus income and the amount of tax debt you owe.

1. First time bankruptcy

  • 9 months automatic discharge if no creditor objects, you fulfill all your duties, and do not have surplus income exceeding an average of $200 per month.
  • 21 months automatic discharge if no creditor objects, you fulfill all your duties, but have a surplus income of more than $200 per month.

2. Second time bankruptcy

  • 24 months automatic discharge if no creditor objects, you fulfill all your duties, and do not have surplus income exceeding an average of $200 per month.
  • 36 months automatic discharge if no creditor objects, you fulfill all your duties, but have a surplus income of more than $200 per month.

3. Amount of tax debt you owe to Revenue Canada

  • If you owe more than $200,000 of tax debt to Revenue Canada, including penalties and interest, and that amount represents 75% or more of your unsecured debt, you will be required to go to court to apply for discharge.

4. Completion of duties

  • During your bankruptcy you will be required to perform certain duties, including attending two mandatory counselling sessions, reporting your income and making required payments. Failure to complete the requirements of your bankruptcy will jeopardize your automatic discharge and lengthen your bankruptcy.

5. Opposition of discharge

  • Occasionally, although rarely, creditors, the trustee or the Superintendent of Bankruptcy may oppose a bankrupt’s discharge. When this happens, the matter goes to mediation or bankruptcy court.

Surplus income is based on the difference between the amount of your take home pay per month and your allowable, threshold expenses. Your threshold expenses are determined based on the region you live in and how many dependants you have. The Bankruptcy & Insolvency Act dictates how to calculate surplus income. A trustee must follow the guidelines set out in the BIA, Bankruptcy & Insolvency Act, in determining your surplus income.

What do I do now?

A trustee in bankruptcy will be able to guide you to determine what your surplus income might be and how long your bankruptcy will last. We recommend that you ask a trustee to review your situation before making your decision final. Each of our bankruptcy trustees offer a free initial consultation.

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