How Long Will I Be Bankrupt in Canada?
How long does bankruptcy last in Canada? Not forever, fortunately. Bankruptcy is a legal process which is intended to provide a new financial start, without being unnecessarily punitive.
Your bankruptcy ends when you receive a discharge, the event that actually cancels your debts.
Several factors affect the length of personal bankruptcies in Canada. First-time bankrupts who make very little income are often eligible for discharge after the legislated minimum period of nine months. However, your bankruptcy will last for more than nine months if you make surplus income, or if this is not your first bankruptcy.
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Here are the conditions that could prolong your bankruptcy:
Do You Have Surplus Income?
If your monthly income is $200 or more in excess of the current surplus income limit set by the government, it is possible that your bankruptcy will be extended for longer than nine months, and you will be required to pay a portion of this income into your bankruptcy.
It is not wrong to make surplus income, but it is only fair that a portion of it be paid to your creditors. Having surplus income also lengthens the period you are bankrupt – usually to twenty-one months for first-time bankruptcies.
For more information, see our page on surplus income.
Is This Your Second Bankruptcy?
If you have been bankrupt before, you will not be eligible for an automatic discharge from bankruptcy in nine months. Typically, a second bankruptcy lasts a minimum of twenty-four months; this is extended to a minimum of thirty-six months if the second-time bankrupt has significant surplus income.
Have You Completed All Your Duties as a Bankrupt Person?
If you have failed to complete one or more of your duties in bankruptcy, your discharge will be delayed. The delay will depend on the seriousness of the failure and how soon you complete the missing duties.
Will Your Discharge Be Opposed?
The discharge from bankruptcy is usually granted if you are earning only enough income to keep yourself and your dependants reasonably provided for, and if you have received credit counselling (one of your duties in bankruptcy).
Occasionally, creditors, the Trustee, or the Superintendent of Bankruptcy oppose a bankrupt’s discharge. When this happens, the matter goes to mediation or is heard in Court. Opposition to discharge is not common, but can happen if it is believed that you did not deal honestly with your creditors or with the Trustee, or if you have not completed your duties in bankruptcy.
In Canada, only a Licensed Insolvency Trustee can file for bankruptcy on your behalf. Your Trustee is qualified to answer all your questions, and tell you about any possible alternatives to bankruptcy that apply to your situation. He or she will also help answer the question, “how long does bankruptcy last?” in your particular case. If you do file for bankruptcy, your Trustee will help you to keep the bankruptcy as short as possible.
Contact a Licensed Insolvency Trustee today for a confidential first appointment at no charge.
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