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How Often Can You File Bankruptcy?

Many of us have experienced financially challenging times – especially recently. In a typical year, over 100,000 Canadians file for bankruptcy or consumer proposal.

Some of these consumers have been bankrupt before and this lends itself to three important questions: 

Can you file for bankruptcy twice?
How often can you file for bankruptcy in Canada?
Is there a time limit between bankruptcies?

Can you file for bankruptcy twice?

Yes, you can file for bankruptcy twice, but only if your first bankruptcy has been discharged. Second bankruptcies are not rare in Canada, but the rules concerning them are more stringent than for first bankruptcies. The most important difference is that a second-time bankruptcy will last longer – typically, two or three years. This period could be longer if you don’t meet all your obligations during the bankruptcy, or if a creditor or creditors challenge your discharge from the bankruptcy.

If a creditor or creditors file this challenge, you will attend a court hearing and a judge will decide if you must remain in bankruptcy longer.

Also, a second bankruptcy’s effects on your credit rating last longer. In a first bankruptcy, a notation remains on your credit rating for an average of six years after the date of your discharge. In a second bankruptcy, this period could extend to 14 years. During this time it will be difficult to acquire credit.

Read more in our article, Second-Time Bankruptcy and Bankruptcy Discharge.

How Often Can You File for Bankruptcy?

There is no specific time limit between bankruptcies before you can file another one. Multiple bankruptcies should be avoided. In a first or a second bankruptcy, once you have completed your obligations your discharge is automatic as long as your creditors do not file a challenge with the court. However, if you are unlucky enough to file for bankruptcy a third time, your discharge is not automatic. You will need to attend a court hearing and will be asked to explain to the judge why you have been bankrupt three times. If your creditors and the judge are not satisfied, your bankruptcy could be lengthened.

If you’re considering a second bankruptcy, speak to a Licensed Insolvency Trustee for a free consultation and discover your options and alternatives to a better future.