Can I Declare Bankruptcy More Than Once?

Declaring Bankruptcy More Than Once is Possible, But There Are Intricacies

Life is full of unforeseen circumstances that might lead to financial instability. Sometimes, these situations might make you consider declaring bankruptcy, not once, but more than once. “Can I Declare Bankruptcy More Than Once?” is a common question among individuals grappling with financial difficulties. This article aims to shed light on this topic and provide valuable insights to help you navigate the complexities of bankruptcy.

Multiple Bankruptcy Filings: Is It Possible?

Yes, you can file for bankruptcy more than once, although it may come with its unique challenges and consequences. The process of declaring bankruptcy is generally private and straightforward, offering you protection from creditors and a chance at a fresh financial start. However, filing for bankruptcy more than once can alter the process and consequences.

The Process of Filing a Second Bankruptcy

Filing for bankruptcy a second time is slightly different from the first bankruptcy filing. The initial step is to partner with a reliable Licensed Insolvency Trustee who understands your situation and provides the necessary support.

After filing for bankruptcy, you will have several responsibilities to fulfill before you can be discharged. These responsibilities can include:

 

  • Submitting a monthly “Statement of Income & Expenses” that details your household income and expenditure.
  • Participating in two private one-on-one financial counseling sessions with a Qualified Insolvency Counsellor.

 

Duration of a Second Bankruptcy

If you’ve declared bankruptcy before, the major difference you’ll notice in your subsequent filing is the duration. The time you’ll spend “in bankruptcy” will be longer in the second filing. The discharge period varies based on your household income:

 

If your household income is below the government’s low-income thresholds, you could qualify for an automatic discharge after 24 months.

If your income is higher and you’re required to pay ‘surplus income’, your bankruptcy period extends to 36 months.

Costs Associated with a Second Bankruptcy

Filing for bankruptcy a second time is generally costlier than the first time. If your income is below the low-income threshold, the cost of a basic second bankruptcy will be around $4,800, typically paid in monthly installments over the 24-month bankruptcy period. Despite the higher cost, filing for bankruptcy is often cheaper than repaying all your debts in full, along with the ongoing interest charges.

Impact on Credit History

A second bankruptcy has a more significant impact on your credit history compared to the first. A first bankruptcy stays on your credit history for six years following your discharge. However, a second bankruptcy renews the first-time note, and both filings will reflect on your credit history for 14 years after your discharge from each.

If you’re concerned about the long-term impact on your credit history from filing bankruptcy again, you might want to consider a Consumer Proposal as an alternative solution to consolidate and reduce debt. Learn more about the different options for debt forgiveness here.

Filing a Second Bankruptcy Before Discharge of the First

You cannot file for bankruptcy again if you haven’t yet been discharged from your prior bankruptcy. A delay in obtaining a discharge from a previous bankruptcy can pose significant challenges, especially if your creditors have resumed their pursuit for debts related to your unfinished bankruptcy.

In some cases, if you haven’t finished your first bankruptcy, you can use a Consumer Proposal to annul your bankruptcy and instead repay a portion of your consolidated debt by filing a Consumer Proposal.

Consumer Proposal: An Alternative to Bankruptcy

A Consumer Proposal is an attractive alternative to bankruptcy, particularly for individuals considering a second or third bankruptcy. It’s a unique solution that allows you to consolidate and legally clear your debt without filing for bankruptcy. A Consumer Proposal offers several benefits, including:

 

  • Consolidation of virtually all your debts, stopping interest charges and reducing the amount you need to repay.
  • Tailoring your repayment terms to fit your specific situation.
  • Protection from creditors and a clear “debt-free” date.

 

Just like personal bankruptcy, you can only access Consumer Proposals by working with a Licensed Insolvency Trustee.

Filing for Bankruptcy After a Consumer Proposal

Yes, you can declare personal bankruptcy if you’ve completed a Consumer Proposal before. The bankruptcy process would be the same as for a person filing for bankruptcy for the first time, and your prior Consumer Proposal would not result in any penalty in the bankruptcy.

Dealing with Debt

Debt is often a result of unforeseen circumstances or events beyond our control.

Dealing with debt can be overwhelming, and it’s important to seek professional help early on. At Bankruptcy Canada, we offer supportive debt management services with care, respect, and without judgment.

**Get confidential advice about dealing with debt or get started with your debt-free plan. Bankruptcy Canada’s team of caring experts is here for you. **Book your free non-judgmental debt consultation today.

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