One of the most common concerns about bankruptcy is:
“How long will this last?”
The answer depends on your income and whether it’s your first bankruptcy.
Here’s what you need to know.
First-Time Bankruptcy
For most first-time bankruptcies:
You are eligible for discharge in 9 months.
However, this applies only if:
Your income is below the government surplus income threshold
You complete all required duties
If your income exceeds the threshold, bankruptcy lasts 21 months.
Second Bankruptcy
If this is your second bankruptcy:
It lasts 24 months (no surplus income)
Or 36 months (if surplus income applies)
What Is Surplus Income?
Surplus income is calculated based on:
Household income
Family size
Government income guidelines
If your income exceeds the allowed threshold, you must pay a portion into your bankruptcy.
What Happens During Bankruptcy?
During the process:
Interest stops
Collection calls stop
Wage garnishments stop
You make required monthly payments (if applicable)
You attend financial counselling sessions
When Are You Officially Finished?
You are legally discharged once:
All payments are made
Duties are completed
Counselling sessions are attended
After discharge, most unsecured debts are eliminated.
Bankruptcy Is Temporary — The Reset Can Be Long-Term
While bankruptcy lasts months, the financial reset can last a lifetime.
Understanding timelines helps reduce fear and uncertainty.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Bankruptcy in Canada must be administered by a Licensed Insolvency Trustee.