How Long is Personal Bankruptcy in Canada?

There is a lot of misinformation out there about personal bankruptcy, perhaps related to this question more than any other. The reason for the confusion is that there have been significant changes to the bankruptcy system in the last couple years. These changes mean that the answer could be very different for different people depending on your circumstances.

One quick comment, and then I’ll try to explain the different possible lengths of time for bankruptcy. When a person files for bankruptcy, he or she is asking to be legally discharged or released from paying his or her debts because there is no reasonable hope of paying it all back. A person is “discharged” from bankruptcy when the process is complete. It is when you are discharged that the debts are gone. That’s the fresh start.

For a person who hasn’t been bankrupt before, bankruptcy is either 9 or 21 months in length before you are discharged. It is 9 months if you have no surplus income and 21 months if you are required to make surplus income payments. Please check the related article linked above to understand more about how surplus income works.

Maybe you thought it was seven years. I hear that all the time. Bankruptcy itself is 9 or 21 months for the debts to be gone. Then the bankruptcy still shows on your credit report for another six years after the 9 or 21 months is complete. Add it together, that’s where the seven years comes from.

The system is similar for a second bankruptcy. However, instead of 9 or 21 months it is 24 or 36 months depending on whether or not you have surplus income. Furthermore, a second bankruptcy shows on your credit report for 14 years after you are discharged.

More than two bankruptcies? You would be required to go to court for a judge to decide how long and how costly bankruptcy would be.

If you are finding this information scary or overwhelming, there may be other options that make more sense. With a consumer proposal, for example, it shows on your credit report for only three years after your last payment is made.