To qualify for bankruptcy in Canada, there are some eligibility requirements:

  • You must owe at least $1,000 in unsecured debt.
  • You must either live in Canada, do business in Canada or own property in Canada.
  • You cannot make payments to your unsecured creditors as they become due.
  • Your debts surpass the value of your assets.

If you cannot pay your bills and owe more than what your assets are worth, you are insolvent. The good news is bankruptcy can give you a fresh start.

Check if you’re eligible for bankruptcy

Now that we’ve digested the eligibility requirements let’s break down each one to determine if you qualify. Always ask a trustee if you’re unsure.

Do you owe at least $1,000 in unsecured debt?

You must owe your unsecured creditors at least $1,000 in debt to file for bankruptcy.

It’s simple to find out: total up all your balances to determine how much debt you have.

Bankruptcy can only eliminate unsecured debts, so you’ll want to research the types of debt you owe.

Even if you qualify, bankruptcy might not make sense for you if your debt is relatively small. If you have a steady income, there might be a better way to resolve the debt.

Many Canadians turn to a Licensed Insolvency Trustee when seeking help with debt.

Only a trustee can administer government-regulated insolvency proceedings, such as a consumer proposal or bankruptcy.

If neither one works for you, your trustee will find an alternative solution for your debt issues.

Do you live in Canada, do business in Canada, or own property in Canada?

If you want to file for bankruptcy in Canada, you need to meet one of the following criteria:

  • Be a resident of Canada.
  • Do business in Canada.
  • Own property in Canada.

You don’t need to be a Canadian citizen to file for bankruptcy in Canada, and Canadians living abroad can also file.

Are you unable to make payments to your creditors as they become due?

If you are missing payments or are battling past due bills, bankruptcy is one solution that could help.

After consultation with a Licensed Insolvency Trustee, you’ll learn how to combat your debts.

For some, careful budgeting, planning and saving can resolve debt issues. For others, the situation is more difficult.

Your trustee will assess your situation after a comprehensive review of your debts, assets, income and expenses. Understanding your current financial position will help the trustee determine if you have sufficient income to make your monthly obligations or not.

If there is an alternative route to reduce your outgoings to make up for the shortfall, then you might be able to avoid bankruptcy altogether.

You owe more in debts than the value of your assets

This last requirement is about your assets. Would you have enough money to pay off your debts if you sold the items you own?

If the answer is yes, bankruptcy might not alleviate your debt problems. But, there are other options available, such as a consumer proposal where you can keep your assets.

Bankruptcy can be complicated if you have a home, car or savings.

When you file, you may have to surrender some assets to a Licensed Insolvency Trustee, which can be sold and distributed to your creditors.

But the upside is you can keep some assets and make arrangements with your trustee to repurchase non-exempt assets.

How do you know if you qualify for bankruptcy?

If you are still unsure if you qualify for bankruptcy, contact a Licensed Insolvency Trustee for a free consultation. Only a trustee can file your bankruptcy.

After an initial assessment, they will determine if you meet the requirements.

The good news is if bankruptcy doesn’t suit, the trustee will recommend another solution to resolve your debt problems.

Free consultation: connect with a Licensed Insolvency Trustee for free debt advice.

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If I qualify, why should I file bankruptcy?

The truth is bankruptcy isn’t suitable for everyone, and it may well be that another solution will suit you better.

There are many advantages and disadvantages to bankruptcy, but one clear advantage is the immediate protection from creditor action during your bankruptcy.

Because of this, your Licensed Insolvency Trustee can ensure that wage garnishments are lifted, which may give you some much-needed financial relief.

See also: Advantages and disadvantages of bankruptcy

If you don’t qualify for bankruptcy

If you don’t qualify for bankruptcy, your trustee may recommend filing a consumer proposal.

A consumer proposal is a legally binding agreement between you and your creditors, where you offer to repay what you can afford rather than the total amount.

Your creditors forgive the remaining balance. It is a formal agreement to consolidate and settle your debts for a lower amount than you owe.

Most importantly, you can protect your assets: you will not lose your home, vehicle or RRSP.

See also: What is a consumer proposal?

Can I file for bankruptcy on my own?

You cannot file for bankruptcy on your own. Instead, bankruptcy is filed on your behalf by a Licensed Insolvency Trustee.

Your trustee can establish whether bankruptcy is right for you, helping avoid such a drastic move unless absolutely necessary.


Bankruptcy helps thousands of people get their finances under control and their lives back on track.

Whether you qualify depends on many factors, so the best way to find out is to ask a Licensed Insolvency Trustee.

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

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