How to File Bankruptcy in British Columbia

What is personal bankruptcy?

Personal bankruptcy is a legal process under the federal Bankruptcy and Insolvency Act. You assign your non-exempt assets to a Licensed Insolvency Trustee, who distributes them to your creditors. In return, most of your unsecured debts are eliminated when you receive your discharge.

Only a Licensed Insolvency Trustee can administer a bankruptcy. The trustee handles every step, from the initial filing with the Office of the Superintendent of Bankruptcy to your eventual discharge. Once you file, a stay of proceedings stops all collection calls, wage garnishments, and legal actions from your unsecured creditors.

The rules are federal, so bankruptcy works the same way whether you live in Vancouver, Victoria, or Kelowna. The one exception is asset exemptions, which are set by provincial law.

Who qualifies for personal bankruptcy in British Columbia?

You can file for bankruptcy in British Columbia if you meet three conditions. You must owe at least $1,000 in total debt. You must be insolvent, meaning you cannot pay your debts as they come due. And you must be a Canadian resident or have property or a business in Canada.

There is no maximum debt threshold for bankruptcy. If your unsecured debt exceeds $250,000 (excluding your mortgage), a consumer proposal is not available, but bankruptcy still is. You do not need to prove that you tried other options first.

How does the bankruptcy process work step by step?

Step 1: Initial consultation

A bankruptcy starts with a free consultation with a Licensed Insolvency Trustee. The trustee reviews your income, expenses, assets, and debts. If bankruptcy is a sensible route given your situation, the trustee explains the process, your duties, and what you can expect to keep.

Step 2: Filing the assignment

The trustee files an assignment in bankruptcy with the Office of the Superintendent of Bankruptcy. From that day, a stay of proceedings protects you from creditors. Collection calls stop. Wage garnishments end. Any pending lawsuits from unsecured creditors are halted.

Step 3: Duties during bankruptcy

You have specific duties while bankrupt. You must submit monthly income and expense reports to the trustee. You must attend two mandatory financial counselling sessions. You must surrender your tax refunds and any non-exempt assets. If you have surplus income, you make monthly payments to the trustee.

Step 4: Discharge

For a first-time bankruptcy with no surplus income and no opposition from creditors, you receive an automatic discharge after nine months. If you have surplus income above $200 per month, the discharge extends to 21 months. A second bankruptcy lasts 24 months without surplus income, or 36 months with it.

What does bankruptcy cost in British Columbia?

The base cost of a first-time bankruptcy with no surplus income and no non-exempt assets is $1,800 plus applicable taxes, paid in monthly instalments over nine months. This covers the trustee’s fees, the two counselling sessions, and the government filing fee.

If you have surplus income, your costs go up. The government sets monthly net income thresholds based on family size. As of 2025, the thresholds are as follows.

Family size	Monthly net income threshold
1 person	$2,666
2 persons	$3,318
3 persons	$4,080
4 persons	$4,953
5 persons	$5,618
6 persons	$6,336
7+ persons	$7,054

Source: Office of the Superintendent of Bankruptcy Canada – Directive No. 11R2-2025, Surplus Income

If your net income exceeds the threshold for your family size by more than $200 per month, you pay 50% of the excess to your trustee each month. A single person earning $3,166 per month has $500 in surplus income, which means a monthly payment of $250. That surplus income also extends a first bankruptcy from 9 months to 21 months.

What assets can you keep in bankruptcy in British Columbia?

When you file for bankruptcy, you surrender your non-exempt assets to the trustee. What you can keep in British Columbia is set by the provincial Court Order Enforcement Act.

BC’s exemption limits are low, particularly for home equity. You can keep household furnishings and appliances up to $4,000 in liquidation value. You can keep one vehicle with equity up to $5,000 (reduced to $2,000 if you have outstanding family maintenance debt). Your tools of the trade are protected up to $10,000. Clothing and medical aids have no dollar limit.

Source: British Columbia Court Order Enforcement Act – Exemption Regulation

The home equity rule

BC has a two-tier home equity exemption. If your principal residence is in Greater Vancouver or the Capital Regional District (Victoria), the exemption is $12,000. Everywhere else in BC, the exemption is $9,000.

In a province where the average home price in Metro Vancouver exceeds $1 million, a $12,000 equity exemption is effectively meaningless for anyone who has owned property for more than a few years. Even outside the major cities, $9,000 covers very little.

RRSPs and RRIFs are protected under federal law, except for contributions made in the 12 months before filing. This is one area where BC residents have strong protection in bankruptcy.

If you own a home with any meaningful equity, bankruptcy almost certainly means losing it. A consumer proposal avoids that entirely.

How does bankruptcy affect your credit?

Bankruptcy gives each included account a rating of 9 on your credit report. R9 applies to revolving credit such as credit cards, I9 to instalment loans, C9 to unsecured lines of credit, and O9 to open accounts. For context, a rating of 1 is the best and 9, assigned in bankruptcy, is the worst.

For a first bankruptcy, the record stays on your Equifax credit report for six years after your date of discharge. TransUnion removes it six years after discharge as well.

A second bankruptcy stays on your report for 14 years after discharge. That is a long time to carry the worst possible rating.

You can start rebuilding your credit after discharge with a secured credit card. Most people see meaningful improvement within two to three years of consistent use.

What debts does bankruptcy eliminate?

Bankruptcy eliminates most unsecured debts. That includes credit card balances, personal loans, lines of credit, payday loans, medical bills, and tax debt owed to the Canada Revenue Agency.

Some debts survive bankruptcy regardless. Under Section 178(1) of the Bankruptcy and Insolvency Act, these include child and spousal support obligations, court fines and penalties, debts arising from fraud, and government student loans if you have been out of school for fewer than seven years.

Source: Government of Canada – Bankruptcy and Insolvency Act, Section 178

Secured debts, such as your mortgage or car loan, are not affected by bankruptcy. If you continue making those payments, you keep the asset.

Bankruptcy vs. consumer proposal in British Columbia

Bankruptcy and a consumer proposal both fall under the Bankruptcy and Insolvency Act. They solve the same problem, but they work differently. The table below breaks down the main differences for BC residents.

	Bankruptcy	Consumer proposal
Assets	Non-exempt assets surrendered	You keep everything
Duration	9 to 21 months (first)	Up to 5 years
Monthly payments	Vary based on surplus income	Fixed for the full term
Surplus income	Applies, extends duration and cost	Not applicable
Credit rating	9 (e.g. R9, I9)	7 (e.g. R7, I7)
Credit report duration	6 years after discharge (first)	3 years after completion or 6 years after filing
Home equity (Vancouver/Victoria)	Exposed above $12,000	Protected entirely
Home equity (rest of BC)	Exposed above $9,000	Protected entirely

Bankruptcy is faster. A first-time bankruptcy with no surplus income is finished in nine months. A consumer proposal takes up to five years.

A consumer proposal costs less for anyone with income above the surplus threshold or assets above the exemption limits. If your income fluctuates or you expect a raise, a consumer proposal locks in your payments from day one.

As of 2025, 84% of British Columbia insolvency filings were consumer proposals, not bankruptcies. BC has the highest proposal-to-bankruptcy ratio among western provinces, and for good reason. With home equity exemptions this low, most BC homeowners are better off in a consumer proposal.

Source: Office of the Superintendent of Bankruptcy Canada – Insolvency Statistics, Q4 2025

British Columbia bankruptcy filings in 2025

As of 2025, 15,331 British Columbians filed for insolvency, a 10.6% increase over 2024, the highest provincial increase in Canada. Of those, 2,427 were bankruptcies.

	British Columbia (2025)	Canada (2025)
Total consumer insolvencies	15,331	140,457
Bankruptcies	2,427	30,289
Consumer proposals	12,904	110,168
Bankruptcy share of filings	15.8%	21.6%
Year-over-year change (total)	+10.6%	+2.3%

Source: Office of the Superintendent of Bankruptcy Canada – Insolvency Statistics, Q4 2025

BC’s 10.6% year-over-year increase is the steepest in Canada. The national total of 140,457 consumer insolvencies in 2025 is the highest in 16 years.

Frequently asked questions

How long does bankruptcy last in British Columbia?

A first-time bankruptcy with no surplus income lasts nine months. If you have surplus income above $200 per month, it extends to 21 months. A second bankruptcy lasts 24 months without surplus income, or 36 months with it.

Will I lose my house if I file for bankruptcy in BC?

It depends on your equity. BC’s Court Order Enforcement Act protects up to $12,000 in home equity in Greater Vancouver and Victoria, or $9,000 elsewhere. If your equity exceeds these limits, the trustee can claim it. Given property values in BC, most homeowners would lose their home or need to pay the excess equity into their estate. A consumer proposal avoids this.

Will I lose my car in bankruptcy?

You can keep one vehicle with equity up to $5,000. If your vehicle is worth more after subtracting any loan balance, you pay the trustee the difference or surrender it. If you owe child support arrears, the vehicle exemption drops to $2,000.

Can I file for bankruptcy on CRA tax debt?

Yes. The Canada Revenue Agency is treated as an unsecured creditor. Income tax, GST/HST, and other CRA amounts owing are included in bankruptcy and eliminated on discharge.

How much does it cost to go bankrupt in BC?

The base cost for a first-time bankruptcy with no surplus income or non-exempt assets is $1,800 plus applicable taxes, paid in monthly instalments. If you have surplus income, you pay 50% of the amount above the government threshold each month. The total cost depends on your income, your assets, and how long the bankruptcy lasts.

Can I keep my RRSP if I go bankrupt?

RRSPs and RRIFs are protected in bankruptcy, except for any contributions made in the 12 months before filing. Those recent contributions are surrendered to the trustee.

What is the difference between a first and second bankruptcy?

A first bankruptcy lasts 9 months (or 21 with surplus income) and stays on your credit report for 6 years after discharge. A second bankruptcy lasts 24 months (or 36 with surplus income) and stays on your credit report for 14 years after discharge. A second bankruptcy also requires a court hearing for discharge.

Can I file for bankruptcy more than once?

Yes. There is no limit on the number of times you can file for bankruptcy. However, each subsequent filing carries longer timelines, higher costs, and a mandatory court hearing for discharge.

Is bankruptcy or a consumer proposal better?

It depends on your situation. Bankruptcy is faster but comes with surplus income rules, asset surrender, and a worse credit impact. A consumer proposal keeps your assets, fixes your payments, and has a shorter credit report impact. A Licensed Insolvency Trustee can walk you through both options.

Talk to a Licensed Insolvency Trustee

If your debts have become unmanageable and you need to understand your options, talk to a Licensed Insolvency Trustee. The initial consultation is free, confidential, and comes with no obligation.