Filing for bankruptcy is a daunting experience that most individuals hope they only have to endure once in their lifetime. The primary goal is to eliminate the burden of overwhelming debts and to pave the way towards a debt-free future. However, life’s unpredictable nature can sometimes lead to a second encounter with bankruptcy. So, Can You File a Second Bankruptcy in Canada?
Understanding the Possibility of Second Bankruptcy in Canada
Yes, you can file a second bankruptcy in Canada, but it’s not as straightforward as the first one. There are certain repercussions associated with the second filing, and it is essential to be cognizant of them before proceeding.
The Consequences of Filing for Bankruptcy Twice
Filing for bankruptcy twice in Canada has distinctive implications, primarily affecting the duration of the bankruptcy process and the cost involved.
- Extended Duration: A first-time bankruptcy typically lasts for nine months, after which the individual is automatically discharged. However, when filing for the second time, the duration extends to a minimum of two years, and could be three years if surplus income is involved.
- Increased Cost: The cost associated with bankruptcy also increases. During a first bankruptcy, the cost typically amounts to $200 per month for nine months. However, in a second bankruptcy, the cost increases to $200 per month for 24 months, plus potential surplus income payments.
- Credit Report Impact: A second bankruptcy will have a more severe effect on your credit report. While a first bankruptcy remains on your report for six to seven years after discharge, a second bankruptcy can stay on the report for up to 14 years, making future borrowing much more difficult.
Frequency of Personal Bankruptcy
Although unusual, there are instances where individuals may need to file for bankruptcy for a third time. This situation requires a more intensive process, including a discharge hearing in a bankruptcy court. The debtor must explain the reasons for multiple bankruptcies to a judge, who then decides the terms and conditions of the discharge.
Exploring Alternatives to Bankruptcy
While the possibility of a second bankruptcy exists, there are alternatives that can help to avoid the financial and emotional toll associated with it.
Consumer Proposals: A Viable Alternative
Filing a consumer proposal is an increasingly popular alternative to filing for a second bankruptcy. A consumer proposal allows you to negotiate your debt down to a manageable amount. This negotiation is conducted by a Licensed Insolvency Trustee, who works with your creditors to reach an agreement.
In most cases, creditors are willing to accept a reduced repayment, as it is preferable to not receiving any repayment at all. Moreover, a consumer proposal allows you to retain your assets, and it halts all creditor calls and legal actions.
If you are contemplating filing for a second or even third bankruptcy, it is advisable to consult a debt advisor who can guide you through the process and help you understand the various options available.
Wrapping Up
Filing for bankruptcy, once or more, is a challenging process that requires deliberation and expert advice. While it is feasible to file a second bankruptcy in Canada, it is not without consequences. Understanding the implications and exploring alternatives like consumer proposals can provide a pathway towards a more secure financial future.
