Filing Bankruptcy in Canada: Minimum Amount of Debt Needed

Legislation and Statistics

According to the Bankruptcy & Insolvency Act, which is the federal legislation that governs the bankruptcy process in Canada, the minimum amount of debt needed for filing bankruptcy in Canada is $1,000.

However, very few people with $1,000 in debts actually go bankrupt. Statistics from the Office of the Superintendent of Bankruptcy Canada tell us that in 2018, the average Canadian consumer who filed for bankruptcy had liabilities of $108,971.

Every Situation Is Different

Bankruptcy is sometimes referred to as an “insolvency solution.” Insolvency is defined as the inability to pay your bills as they become due, because of lack of funds. There are many insolvency solutions in Canada, including bankruptcy, consumer proposal, and credit counselling.

As an example, a person with a high income may be able to service $100,000 in debts without any problems. Their income is preventing them from becoming insolvent, despite the high payments they must make on their debts.

Another person, this one with a lower income and higher expenses, perhaps due to a larger family, may have great difficulty servicing a mere $10,000 in debts. The bills are comparatively small, but they are piling up unpaid, and creditors may be calling.

This second individual, with the lower debts, may be a candidate for bankruptcy and the protection it offers, while the person with higher debts may be able to service them on their own.

So, the qualification for bankruptcy depends on a lot more than the mere amount of debt.

Conversely, even if the amount you owe is equal or greater than the minimum amount of debt ($1,000) required by the law for filing bankruptcy in Canada, and you are having difficulty paying your bills, that does not necessarily mean that you are facing bankruptcy.

Bottom Line: Take Action If Your Debts Feel Overwhelming

The answer to the question, “how much debt for bankruptcy” is simple:

If your debts are more than you are able to repay in a reasonable period of time, you should consider consumer proposal or filing for personal bankruptcy in Canada.

Also, if you are feeling a great deal of stress because of your debts, or if you are already receiving calls from collection agents at home and at work, it is time to take action.

To learn what the options for your particular case are, we recommend that you contact a Licensed Insolvency Trustee today. Only a Licensed Insolvency Trustee can file a consumer proposal or a bankruptcy for you, and he or she can advise you on any other options that fit your situation. Your conversation will be confidential, and your first appointment is free.

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