How many times can you declare bankruptcy?

There is no “limit” to the number of times a person may file bankruptcy as far as the Bankruptcy and Insolvency Act is concerned.

The difficulty will arise when you apply for your discharge (the end of your bankruptcy). The practice in each province is somewhat different and to a large extent you are subject to the decision of the Registrar that hears your application for discharge.

In a first bankruptcy, if you perform all of your duties properly, you are eligible for an Automatic Discharge 9 months and 1 day from the date that you file bankruptcy.

In a second bankruptcy, even if you perform all of your duties properly, you are not eligible for an Automatic Discharge. You must apply to the Court to obtain a Discharge Order. The Registrar will consider the time that has elapsed since your first bankruptcy, the events that lead up to your first and second bankruptcies, and the types of debt that where included in both procedures. In most cases the bankrupt will receive a Suspended Order of Discharge. That means the Court is extending your bankruptcy beyond the Court date. It may be as little as a day, but mostly likely it will be for a number of months (the parctice in Toronto seems to be 6 additional months).

In the case of a third bankruptcy, again the Court will consider the timing of all of your filings, the events that lead up to them and the debts that have been included. Third bankruptcy are rare in Canada becuase most Registrars make it pretty clear that they don’t want to see a perosn who has filed bankruptcy twice again. In the cases that I have seen the Registrars have always added conditions to be met before a discharge was granted – usually they involved extending the bankruptcy by 1 or more years, additional payments and a second appearance in Court.

We advise cleints that if they were to file a fourth bankruptcy it is unlikely the Court would grant them a discharge.