How Do I Get Discharged From Bankruptcy?

Bankruptcy is seen as an effective way to get out of severe debt.

It can settle all of your unsecured debts and the process can take anywhere from 9 to 21 months depending on your circumstances.

However, the process can differ depending on your circumstances and it’s important to understand how you actually get discharged from bankruptcy.

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What does it mean to be discharged?

Being discharged simply means that the process has concluded and that your unsecured debts have been settled.

This means that you are now free of debt unless you have secured loans such as a mortgage to pay for or a car finance deal.

How do I get discharged from bankruptcy?

Being discharged from bankruptcy usually doesn’t take additional action.

For most people, you’ll automatically be discharged from bankruptcy nine months after you file it.

This assumes that you have no extra income and that you’ve completed all of the tasks necessary, such as forfeiting certain non-essential assets.

However, if you do have surplus income, then you’ll likely need to continue making monthly payments before you can be discharged.

This only happens if your monthly income is above the Superintendent’s Monthly Income Standards and will extend the discharge by another 12 months, totalling 21 months.

There are also two different categories for bankruptcy discharge periods; one for first-time bankruptcy and another for consecutive times.

If you’ve claimed bankruptcy before and have no surplus income, the nine-month period is extended to 24 months.

If you have surplus income and this isn’t your first bankruptcy, the discharge period can be as much as 36 months.

In other words, the amount of time it takes depends on a couple of conditions:

 

  • First-time bankrupt and no surplus income: 9 months.
  • First-time bankrupt and surplus income: 21 months after continued payments.
  • Not first-time bankrupt and no surplus income: 24 months.
  • Not first-time bankrupt and surplus income: 36 months after continued payments.

 

As you can see, subsequent bankruptcies will greatly increase the amount of time it takes until you’re considered debt-free.

As such, you’ll want to rely on bankruptcy only if there is no other option.

In addition, having a surplus income that is above a certain limit will also increase the discharge time.

If you still have a fair amount of income, then we suggest a consumer proposal or debt settlement plan as an alternative.

This will help you keep all of your assets but it does require you to pay off the majority of your debts.

What to do after being discharged

Once you’ve been discharged from bankruptcy you can consider yourself debt-free.

However, we highly suggest that you work on budgeting strategies to help minimize the chances that you accumulate severe debt again.

If you’d like to learn more about bankruptcy and discharge periods, don’t hesitate to get in touch with us today for more information.

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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