Can You File Bankruptcy for U.S. Debts in Canada?

Filing Bankruptcy in Canada on American Debt

A lot of Canadians own their own business.

For this reason, it’s not uncommon for somebody who lives in Canada to have debts which are owed to a US lender.

Of course, if you went to school in the United States, then you might even have a US student debt.

Of course, how those debts are dealt with will depend on the financial arrangements that you have and how the debt is tied to you in another country.

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US Debt VS Canadian Debt

The credit reporting system is not actually shared between the US and Canada.

Equifax might exist in both countries but it should be noted that they do not share information.

If you do a lot of shopping in the US, then you might visit a Canadian bank and apply for a US credit card. Charges that you make will be billed in US dollars, and you may pay them from a US/Canadian bank account.

In this case, your debt might well be in US dollars, but it is actually classified as being Canadian debt.

If you go to Florida for 5 months every year then you may be tempted to apply for a department store card.

In this case, you will have a US credit card which is given to you by a US lender.

Charges that you make to that credit card will be in US dollars.

Any charges on that credit card will be US debt.

If you want some clarification, then a US debt is not based on the currency that the debt is in.

It depends on the lending institution.

If you make the decision to file for bankruptcy in Canada then this means that creditors will not be able to pursue you for any US debts in Canada.

If you happen to default on a US debt, then you may be referred to a collection agency who are in the US.

It is likely that they will try and collect the debt through notices and phone calls.

That being said, they will have a hard time trying to pursue the collection if you are living in Canada.

If they wanted to take additional action, such as taking the debt from your wages or if they were to freeze your bank account then they would have to sue you so that they can obtain a judgement in a Canadian court.

If the debt happens to be big enough then a collection agency may be able to do this but given the cost, they probably won’t bother with smaller debts.

US Creditors

One question that a lot of people ask is if a US creditor can pursue you if you happen to file for bankruptcy in Canada.

If you file for insolvency in Canada, then you will be granted a stay of proceedings against any creditor actions.

Filing for bankruptcy or a proposal in the country of Canada means that creditors cannot pursue you for any US debts in Canada for that specific debt.

Your US debts will be included in your bankruptcy or proposal but the debt will only be discharged in Canada.


If you have assets that are in the US or if you earn income, or wages in the US then things get a little more difficult.

Your US creditor can pursue legal action against you as they can use your US assets or even your US income.

If this is the case then you may have to file for insolvencies in both countries.

If you file for bankruptcy in the US, then you will need to hire a US lawyer.

A Canadian trustee is only licensed to handle and file insolvencies for Canada.

Your Credit Rating

A US debt is issued in the US by a US lending institution.

The credit reporting system is not shared between the US and Canada.

Your Canadian bankruptcy will show on your Canadian credit report.

If you do not pay US creditors then the default will show on your credit report.

If you happen to file bankruptcy in the US then this will only appear on your US credit report.

Should you have a cross-border financial arrangement or debts in both countries, then you may want to try and seek advice from a US or Canadian professional.

If you need some help with your debt, then we can help you.

Here at Bankruptcy Canada, we pride ourselves on making sure that we take into account your personal situation so we can give you the best possible solution.

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?

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