How Many Times Can You Declare Bankruptcy In Canada

How Many Times Can You Declare Bankruptcy In Canada

Understanding Bankruptcy Declarations in Canada

Are you wondering about the workings of bankruptcy in Canada, especially how many times one can file bankruptcy? Theoretically, you are allowed to declare bankruptcy multiple times in Canada. However, with every subsequent filing, the consequences intensify, and obtaining a discharge from bankruptcy becomes more challenging. This article aims to shed light on the number of times one can declare bankruptcy in Canada and the factors to consider.

Understanding Bankruptcy Process Timeline

Filing for Bankruptcy for the First Time

If you’re filing for bankruptcy for the first time, you need to comprehend what happens during this phase. If you do not have a surplus income requirement, you are eligible for an automatic discharge from your bankruptcy after nine months. However, if you do have a surplus income requirement, you can receive an automatic discharge from your bankruptcy after 21 months, provided you make payments for those 21 months.

Upon fulfilling all your bankruptcy duties, your trustee will issue you a Certificate of Discharge from your bankruptcy at the end of the nine or 21 months. Filing for bankruptcy does impact your credit for six years from the date of filing.

Filing for Bankruptcy a Second Time

Yes, you can declare bankruptcy twice in Canada. However, the procedure gets more complicated the second time around. If you do not have a surplus income requirement, an automatic discharge from your bankruptcy can be obtained after 24 months. If you have a surplus income requirement, you can receive an automatic discharge from your bankruptcy after 36 months, during which you must make payments.

Second bankruptcies in Canada significantly damage your credit for 14 years from the filing date.

Filing for Bankruptcy a Third Time

If you declare bankruptcy a third time or more, the process gets even more arduous. You will have to make payments for an extended period, as determined by the court, and you will not be eligible for an automatic discharge.

Insights from a Licensed Insolvency Trustee

Although Canadian law permits you to declare bankruptcy as many times as you’d like, it’s not advisable to do so. As a Licensed Insolvency Trustee, it is generally not recommended to file for bankruptcy more than two times unless circumstances necessitate it.

If you file bankruptcy more than twice, you are not eligible for an automatic discharge, meaning you have to appear in Bankruptcy Court to obtain your discharge. You may be required to answer questions, and the Registrar will make a decision regarding your discharge.

Preventing a Third Bankruptcy

There are several alternatives to bankruptcy. A consumer proposal is often a good alternative to declaring bankruptcy in Canada if you have already filed for bankruptcy twice. A consumer proposal is a debt settlement agreement between you and your creditors that allows you to repay a portion of your debts over a period, thus avoiding bankruptcy.

We have an in-depth article discussing consumer proposals, including their pros and cons, how they work, and how they can be an effective alternative to bankruptcy depending on your circumstances.

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