How long do bankruptcies last?

The length of your bankruptcy depends on two factors: your income and whether you’ve declared bankruptcy before.

First, the good news: a first-time bankruptcy can be completed in just nine months.

But, if you have surplus income, your bankruptcy period is extended to 21 months.

How surplus income affects the length of your bankruptcy

It’s true that surplus income extends your bankruptcy. But what is surplus income?

The government sets income thresholds through the Office of the Superintendent of Bankruptcy, which allows you and your family to earn enough during your bankruptcy.

Simply put, if you make more money than the threshold for your family size, you have surplus income. When this happens, you must make additional payments to your creditors during the bankruptcy process.

If you are required to make monthly surplus income payments of $100 or more, your bankruptcy will take longer.

See also: Surplus income in bankruptcy

Here’s a tip: to find out how long your bankruptcy will last, arrange a free consultation with a Licensed Insolvency Trustee.

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How a second bankruptcy affects the length of your bankruptcy

If you’ve been bankrupt before, your bankruptcy will take longer. A second bankruptcy with no surplus income takes 24 months. This extends to 36 months if you have surplus income.

To recap: how long do bankruptcies take?

First bankruptcy

  • If this is your first bankruptcy and you have no surplus income, you will be eligible for discharge after 9 months.
  • If this is your first bankruptcy and you have surplus income, you will be eligible for discharge after 21 months.

Second bankruptcy

  • If this is your second bankruptcy and you have no surplus income, you will be eligible for discharge after 24 months.
  • If this is your second bankruptcy and you have surplus income, you will be eligible for discharge after 36 months.

Third bankruptcy

  • A third bankruptcy requires a discharge hearing in bankruptcy court. The court will decide if you should be discharged and when.

Conclusion

In most cases, a first-time bankruptcy in Canada takes nine months. But, if you have declared bankruptcy before or have surplus income, it will take longer.

Find out how long your bankruptcy will last by arranging a consultation with a Licensed Insolvency Trustee. Your trustee will aim to make bankruptcy as quick and seamless as possible for you.

Let us connect you with a Licensed Insolvency Trustee for a free, no-obligation consultation.

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