Do Special Rules Apply for a Second Time Bankruptcy?

Rules for Filing for Bankruptcy a Second Time in Canada

Second time bankruptcies are not common but they do happen.

If you are facing filing for bankruptcy a second time, you might be asking yourself “Do Special Rules Apply for a Second Time Bankruptcy?”

I have not seen, in my practice, that anyone intentionally sets out to go bankrupt a second time.

Although, I know this is a common perception of the general public.

Bankruptcy Law & 2nd Bankruptcies

Canadian bankruptcy law recognizes that circumstance can cause a person to have to file bankruptcy for a second time.

A second time bankruptcy is allowed but the requirements to be discharged are more strict than for a 1st time bankruptcy.

A first time bankrupt is out of bankruptcy (discharged) as follows:

• 9 month automatic discharge for 1st. time bankrupts who fulfill all their duties and who do not have excess income. (Required monthly payment of less than $100.00 per month);
• 21 months (or more at the court’s discretion) for 1st. time bankrupts who fulfill all their duties and who have excess income. (Required monthly payment of $100.00 per month or greater).

A second time bankrupt is out of bankruptcy (discharged) as follows:

• 24 months for 2nd time bankrupts who do not have excess income.
  (Required monthly payment of less than $100.00 per month),
• 36 months for 2nd time bankrupts who have excess income.
  (Required monthly payment of $100.00 per month or greater)

You can find out how long you will be in bankruptcy and the exact cost by using our Bankruptcy Calculator.

Another “penalty” for second time bankrupts is that they stay on the credit bureau for more than the 6 years that are applicable to first time bankrupts.

If a debtor files a second time Equifax will hold the record of the bankruptcy on your credit report for 14 (fourteen) years from the date of the debtor being discharged from bankruptcy.

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.