The Bankruptcy Process in Canada Explained

5 Steps You Have to Take to File for Bankruptcy

Are you thinking about filing for bankruptcy in Canada?

Then it’s vital that you know the bankruptcy process.

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To ensure that you’re in the know from the get-go, we’ve created a step-by-step guide.

From start to finish, there are five main stages involved in the bankruptcy process in Canada that you should be aware of:


  • The trustee will then prepare all of the key documentation,
  • The documents will then be filed within the government,
  • The Debtor completes their agreed-upon duties,
  • The Debtor is discharged and the majority of your debts are eliminated.


Although it may seem like a daunting and complicated process, with the guidance of a Licensed Insolvency Trustee, you’ll be one step closer to eliminating your debt.

But before you get in contact with them, let us guide you through each of the above steps in more detail.

How long does the process take?

Filing for bankruptcy in Canada is a legal process that takes an average of 9 months to complete.

During this time, you’ll no longer be harassed by creditors or face any legal proceedings and wage garnishments.

A way of allowing you to be discharged from your debts, this along with the protection encourages you to get back to financial stability sooner.

  • Meeting with a Licensed Insolvency Trustee  (LIT)

It’s important to realize that bankruptcy isn’t always appropriate, therefore it’s essential to contact a LIT to discuss what is suitable for your unique requirements.

An example of an alternative that’s often suggested, is filing a Consumer Proposal.

Before it’s decided that filing for bankruptcy is right for you, they will talk you through all of the debt relief options that are available for you.

Analyzing your situation and explaining the process of filing for bankruptcy, the meeting is an invaluable step in the process.

It’s important to keep in mind that for bankruptcy to be appropriate, an individual will have to be insolvent and owe creditors above $1,000.

Asking you several questions surrounding your debts, what your monthly budget is and what high ticket assets you have, they will provide you with the advice that you need.

They will also inform you about which debts are included and excluded so that you can budget more effectively.

  • The preparation of the key documentation 

If it’s decided that filing for bankruptcy is the best step to take, you’ll then have to sit down and fill out all of the required documents (such as the application form).

As part of the process, you’ll also need to provide your LIT with your details, including your birthdate, address and name.

Once they have this information, they will draft certain documentation which will later be filed within the Office of the Superintendent of Bankruptcy.

These typically include:


  • Assessment Certificate – confirming that you’ve successfully met with a LIT and that you’re choosing to move forward with filing for bankruptcy;
  • Monthly Income and Expense Statement (Form 65) – this will include a set monthly budget for your household;
  • Assignment of Assets (Form 21) – this assigns all of your eligible assets to your creditors;
  • Statement of Affairs (Form 79) – this lists all of your debts, income, assets and expenses. It will also include key personal information such as marital status and your address.


When filling out these forms, it’s vital that you read through them thoroughly and complete them honestly.

As part of the process, you’ll have to sign your name on each document.

  • Documents are filed with the government 

Once the above documents are signed, your trustee will take them and file them electronically.

This process is the same throughout Canada, no matter what province you’re in.

When these have been filed, they will wait for a Certificate of Appointment to come through.

This document confirms that your bankruptcy has been efficiently filed and that you’re now officially bankrupt.

Then, there is a ‘stay of proceedings’ in which your creditors are no longer able to collect your debts and are informed of the proceedings.

As part of the process, your trustee will also handle any wage garnishments and will work with unsecured creditors – from payday loans to student loan debt.

  • Debtor completes their agreed-upon duties

It’s vital to realize that an individual can’t be discharged from their bankruptcy unless they have fulfilled all of their duties.

As the objective is to eliminate your debts, you need to do your part in the process from the beginning.

So what duties do you have to take part in? As a debtor, you should expect to do the following:

Give all of your assets that aren’t exempt, as well as your credit cards to your LIT 

They will then supervise the sale of these and add them to your bankruptcy ‘estate’.

Attend two credit counselling sessions

As specified by the Bankruptcy and Insolvency Act of Canada.

These guide you as to what the most effective techniques are to manage your money and avoid any debt problems in the future.

You’ll have 60 days from the date that you’ve declared bankruptcy to complete the first session.

Submit monthly expenses and proof of income to your trustee

Each month, you should send your trustee statements that allow them to calculate any surplus income that you’ll have to pay.

Provide necessary information so that the trustee can file tax returns

Two tax returns will be filed during bankruptcy, including a pre-bankruptcy return (including information that’s prior to the day of filing) and a post-bankruptcy tax return (throughout your bankruptcy up to December 31st of that year).

Make a monthly base payment 

As part of the process, you’re also required to make a monthly base payment to your trustee, that will then be added onto your estate.

They will also manage the funds that are to be paid to your creditors.

  • Debtor is discharged

When the above steps have been successfully completed, your personal bankruptcy will end with an automatic discharge.

Although the process typically lasts around 9 months as aforementioned, this can vary hugely depending on your individual circumstances.

For example, it will take into account whether you’ve gone through the process before, how much monthly payments you make and that you’ve completed all of your duties efficiently.

9 months is usually the period for those who haven’t had to make surplus income payments and that haven’t filed for bankruptcy before.

However, if it’s your second time and you’ve met all of your duties, you could still be automatically discharged within 24 months.

If you don’t receive an automatic discharge but have met all of the duties, your trustee can apply to the court for one.

When this happens, a discharge hearing is organized. In this hearing (which you’re required to attend), your trustee will showcase the proceedings and creditors may be able to object.

If you are discharged after this, you’ll be one step closer to gaining financial stability.

But if you aren’t, certain steps might need to be taken.

When discharged, the note of your bankruptcy will be removed from your credit report 6 years after this.

Contact Bankruptcy Canada Today

Do you want to find out more about the bankruptcy process in Canada?

Then get in contact with one of our local and licensed trustees today.

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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