Are You Eligible For Bankruptcy?

Who is Eligible to Go Bankrupt?

Personal bankruptcy can help obtain debt forgiveness for a variety of unsecured debts, including government debts.

For individuals who feel overwhelmed with financial difficulties, bankruptcy can provide the fresh financial start you need.

However, nothing of this is of any use if you are not eligible for bankruptcy filings.

As a rule of thumb, approximately 10% of our clients are eligible for personal bankruptcy in Canada.

Here’s how to find out if you are:

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What are the criteria of eligibility for bankruptcy in Canada?

To be eligible to file for bankruptcy you need to meet the following requirements:


  • Being Canadian or a resident of Canada for at least 12 months.
  • You owe at least $1,000 in debts.
  • The amount of money you owe is greater than the value of your assets if you sold them.
  • You are unable to pay your debts when they are due.


Depending on your career, personal bankruptcy could also affect your professional growth.

While it doesn’t make you ineligible for bankruptcy, it is worth considering how it will affect your career.

Your licensed insolvency trustee can help you understand the legal ramifications of bankruptcy on licensing organizations and financial roles.

Do you owe $1,000 or more in bankruptcy debts?

Not all debts are covered by bankruptcy.

Consequently, it’s essential to understand that, while you might owe more than $1,000 in unpaid payments, your bankruptcy amount is only eligible for any of the following debts:


  • CRA and other income tax debts;
  • Credit card debts;
  • Overdraft or line of credit;
  • Payday loans;
  • Private individual or family debt;
  • Relevant business and personal debts;
  • Shortfall for mortgages or vehicle leases;
  • ICBC debts;
  • MSP debts;
  • Student loans, both private and federal loans, if you have left school for at least 7 years.


Some debts can’t be part of your bankruptcy filing. Secured debts are not included.

Additionally, court fines, court awards for damages about bodily harm or sexual assaults, debts incurred through misrepresentation or fraud, and child or spousal support arrears will not be forgiven through a bankruptcy filing.

Is the value of your debts greater than the sale value of your assets?

Under Canadian law, not all assets are suitable to be sold.

For instance, tools of the trade may not be sold if they are necessary for your profession.

Some provincial laws also let you keep a portion of your home equity.

However, assets that can be sold to generate money and repay your creditors are RRSP, savings, holiday home or second property, multiple cars, etc.

If their combined value exceeds the amount you owe, you don’t need personal bankruptcy to settle your debts.

Can you pay your debts on time?

This refers to your ability to make monthly payments when they are due.

If you are already making those payments, you are not eligible for bankruptcy.

However, if you only make minimum payments, such as on credit card balance, and can’t afford to repay the debt, you remain a suitable candidate.

You can also consider other debt management plans to reduce the amount you need to repay, such as a debt settlement plan or a consumer proposal, for instance.

Only 10% of clients are eligible to file for bankruptcy.

Are you one of them?

Book your consultation with a trustee to find out if you are eligible for bankruptcy and how to manage your debts.

Canadian Bankruptcies

How to File for Bankruptcy
What is Bankruptcy?
Bankruptcy FAQs
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?

Find Your Personal Debt Relief Solution

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