How Many Times Can You Declare Bankruptcy?

Is it Possible to Declare Bankruptcy More Than Once?

There are moments in life when financial hardship reaches a point of no return, causing individuals to consider bankruptcy as a viable option to reset their financial health. In Canada, such a decision is rarely made lightly, and is considered a last resort. Yet, there are instances where individuals find themselves contemplating bankruptcy for a second time. This article will delve into the complexities of filing for bankruptcy multiple times in Canada, its implications, and the factors to consider before making such a decision.

In the realm of finance, it is important to understand the rules that govern bankruptcy. Legally, there is no limit to the number of times an individual can declare bankruptcy in Canada. However, it’s not as straightforward as it sounds. The process becomes more stringent, with higher stakes and longer-term consequences with each successive bankruptcy.

Bankruptcy: An Overview

Bankruptcy is a legal process that provides relief from most, if not all, of your debts. The process is governed by the Bankruptcy and Insolvency Act and is administered by an Licensed Insolvency Trustee (LIT).

Filing for Second Bankruptcy: The Process

The possibility of filing for a second bankruptcy arises only after you have been discharged from your previous one. A discharge is a court order that releases the debtor from the obligation to repay the debts. However, the second time around, the road becomes more treacherous. You do not qualify for an automatic discharge in nine months as in the case of a first bankruptcy. Instead, your bankruptcy could last anywhere from 24 to 36 months depending on whether you have surplus income.

The court will determine the terms of your discharge, including the duration of your bankruptcy and whether you are required to continue making payments into the bankruptcy. A creditor also has the right to oppose your bankruptcy discharge, which could prolong your bankruptcy and increase the cost.

The Consequences of Multiple Bankruptcies

While bankruptcy provides relief from debts, it’s not without its repercussions, especially when filed multiple times.

Credit Rating Impact

First and foremost, your credit rating will take a hit. A first bankruptcy remains on your record for 6-7 years, but a second bankruptcy can remain up to 14 years. This can severely limit your ability to secure credit in the future.

Increased Scrutiny

With a second bankruptcy, your financial affairs will come under increased scrutiny. The court and your creditors will likely question your ability to manage your finances, which can lead to additional stress.

Making the Best Financial Decision

Deciding to file for bankruptcy for a second time is a complicated decision that should not be made in haste. It’s crucial to consult with a Licensed Insolvency Trustee (LIT) who can help you understand the implications and explore possible alternatives to bankruptcy.

At Bankruptcy Canada, our professionals provide expert advice to help you make an informed decision. We discuss the pros and cons of a second bankruptcy as well as possible alternatives. If you decide to proceed with bankruptcy, we guide you through the filing process from beginning to end.

Conclusion

Navigating the intricacies of bankruptcy, especially multiple times, can be overwhelming. While it’s legally possible to file for bankruptcy more than once in Canada, the implications are significant and long-lasting. Therefore, it’s crucial to seek professional advice and explore all possible alternatives before making such a decision.

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