How long does bankruptcy last in Canada?

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In Canada, bankruptcy timelines vary by situation—typically from 9 to 21 months. Your first bankruptcy may last 9 months unless you earn above the surplus income threshold, potentially extending it to 21 months. During this period, you’ll make payments via a Licensed Insolvency Trustee and attend financial counseling.

_{Understand bankruptcy timelines in Canada: 9-21 months.}

Question

How long do you have to pay bankruptcies in Canada? I’m worried about the payment timeframe involved with bankruptcies. How long will I need to continue making payments under a typical arrangement?

From: Anonymous Question, Alberta (AB)

Debt Insiders Answer

In Canada, bankruptcy isn’t a one-size-fits-all deal—it varies based on your personal situation. Generally, you’re looking at a 9 to 21-month stretch. If it’s your first time going bankrupt and you don’t have extra earnings over the threshold (no surplus income), you might wrap it up in 9 months. But if you’re earning more than that magic number, brace yourself for potentially up to 21 months. During this time, you’ll make specified payments to the Licensed Insolvency Trustee who’s in charge of distributing whatever they can to your creditors. This timeline can put a dent in getting your credit back on track, so understanding the long-term impact is important.

While you’re tackling this financial hurdle, you’ll also need to attend mandatory financial counseling sessions and stick to the trustee’s rules. Once you’ve checked all the boxes, you’ll receive a discharge that wipes the slate clean of the debts included in the bankruptcy. Curious about how this all might play out in your world? Chat with us or check out our bankrtupcy articles for more info!

From: Anonymous Question

Office of the Superintendent of Bankruptcy (OSB) Answer

In Canada, the duration of payments in a bankruptcy can vary depending on the individual’s income and situation. Under section 68 of the Bankruptcy and Insolvency Act, if your income is below the threshold set by the Superintendent of Bankruptcy, your bankruptcy lasts 9 months. If your income exceeds that threshold, the bankruptcy period is extended to 21 months. Payments are typically made on a monthly basis until the bankruptcy is discharged, which occurs at the end of the applicable period.

From: This answer is provided by scanning the Bankruptcy & Insolvency Act and related directives from the Office of the Superintendent of Bankruptcy (OSB).

Related Questions

Here are the top 5 most frequently asked questions related to the duration and process of bankruptcy in Canada, along with brief answers:

1. How long does it take to be discharged from bankruptcy?

• Typically 9 months for a first bankruptcy without surplus income payments, 21 months with surplus income payments, 24 months for a second bankruptcy without surplus income payments, and 36 months for a second bankruptcy with surplus income payments[1][4][5].

2. What factors determine the length of time in bankruptcy?

• The length of time is determined by whether it is your first or subsequent bankruptcy, and whether you are required to make surplus income payments[1][4][5].

3. Can bankruptcy discharge be opposed or delayed?

• Yes, a discharge can be opposed by creditors, the Licensed Insolvency Trustee (LIT), or the Office of the Superintendent of Bankruptcy, and can be delayed if certain conditions are not met[1][4][5].

4. How does surplus income affect the bankruptcy discharge timeline?

• If you have surplus income above $200 per month, your bankruptcy period will be extended to 21 months for a first bankruptcy and 36 months for a second bankruptcy[1][4][5].

5. What types of debts are not discharged in bankruptcy?

• Debts such as alimony and child support, student loans (if less than seven years since you stopped being a student), court-ordered fines or penalties, and debts arising from fraud are not discharged[1][4][5].

If you have a question about debt see our debt questions or ask your own debt related question.

References

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