The answer to the question of how long does bankruptcy last will depend on several factors, including whether or not you have surplus income or not and if you are filing bankruptcy for a first, second or even third time.
Your bankruptcy will end when you receive your discharge (which happens automatically in almost all cases), which is what actually erased your debts and gives you your fresh start.
While most people who have gone bankrupt will be eligible for their bankruptcy discharge after the nine month minimum time to be in bankruptcy, there are certain conditions that will extend your bankruptcy past 9 months.
Conditions that will extend a bankruptcy past 9 months include:
Do You Have Surplus Income?
Bankrupts that have surplus income will have their bankruptcy extended by a period of 12 months. Surplus income is any income you have over a limit that is set by the government based on the size of your household.
If your income is more than $200 over the limit allowed by the government you will have to pay 50% of the surplus income into your bankruptcy estate and the length of your bankruptcy will be extended by an additional 12 months.
Have You Been Bankrupt Before?
If you have already filed for bankruptcy in the past you will not be eligible for an automatic discharge after 9 months and you will be bankrupt longer than in your first bankruptcy.
Have You Completed Your Duties as a Bankrupt?
If you have not completed your duties as a bankrupt you will not receive your automatic bankruptcy discharge and you will stay bankrupt until you have completed all of the required duties.
Failure to complete your duties will increase the time you are bankrupt and the cost of your bankruptcy filing so it is very important that you complete all duties your Trustee tells you to complete.
Is Your Discharge Opposed?
In rare cases your trustee, your creditors, or the Superintendent of Bankruptcy will oppose your discharge and you must go to court to get your discharge granted.
The length of bankruptcy in Canada will be:
- A first time bankrupt with no surplus income will be bankrupt for 9 months (unless their discharge is opposed);
- A first time bankrupt with surplus income payments required will receive their bankruptcy discharge in 21 months (unless opposed);
- A second time bankrupt with no surplus income will receive their automatic bankruptcy discharge after 24 months of being bankrupt (unless their discharge is opposed);
- A second time bankrupt with surplus income will be bankrupt for 36 months (unless their discharge is opposed);
If you are filing for bankruptcy a third time you will not be eligible for an automatic discharge and your bankruptcy trustee will have to apply to the bankruptcy court for your discharge application.
If you have any questions about this or other aspects of bankruptcy or consumer proposals you can set up a FREE consultation with our trustees, who are in every province and territory in Canada.