How long does a first bankruptcy last in Canada?
A first bankruptcy in Canada lasts 9 to 21 months. The exact length depends on whether you have surplus income.
If your household income stays below the government threshold, or exceeds it by less than $200 per month, you are eligible for an automatic discharge after 9 months. If your surplus income is $200 or more per month, the bankruptcy extends to 21 months.
You are eligible for an automatic discharge if you complete all your bankruptcy duties on time and no one objects to your discharge.
Source: Government of Canada – Bankruptcy discharge
| Bankruptcy | No surplus income | With surplus income |
|---|---|---|
| First | 9 months | 21 months |
| Second | 24 months | 36 months |
| Third | 36+ months (court decides) | 36+ months (court decides) |
Source: Government of Canada – Considering bankruptcy
How long does a second or third bankruptcy last?
A second bankruptcy lasts 24 months with no surplus income, or 36 months with surplus income of $200 or more per month. The process is longer because the court and your creditors expect more accountability after a previous filing.
A third bankruptcy does not have an automatic discharge. The process takes at least 36 months and often longer, depending on your circumstances.
A bankruptcy court judge decides when you can be discharged and examines reasons why previous bankruptcies did not resolve your debt before setting terms.
A Licensed Insolvency Trustee can explain what to expect based on your income, assets, and filing history.
What is surplus income in bankruptcy?
Surplus income is the amount your household earns above the threshold set by the Office of the Superintendent of Bankruptcy. The OSB updates these thresholds each year in accordance with Statistics Canada’s low-income cutoffs.
As of 2025, the monthly threshold for a single person is $2,666. For a household of two, the threshold is $3,318. A family of four has a threshold of $4,953.
Source: Office of the Superintendent of Bankruptcy Canada – Directive No. 11R2-2025, Surplus Income
If your available monthly income exceeds the threshold by $200 or more, you pay 50% of the excess amount into your bankruptcy estate. That payment continues for the full length of your bankruptcy.
For example, a single person earning $3,100 per month after deductions would have a surplus income of $434. They would need to pay $217 per month to the estate for 21 months, rather than 9, which is a significant difference in both cost and time.
2025 surplus income thresholds by family size
| Family size | Monthly 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, Appendix A
What can delay your bankruptcy discharge?
Several things can delay your discharge, and the most common reason is unpaid surplus income.
Unpaid surplus income
If you still owe surplus income payments when your discharge date arrives, your trustee arranges mediation to set a formal payment agreement. You pay off the remaining balance before your discharge is granted.
Missing surplus income payments is the single most common reason for a delayed discharge.
Creditor objection
A creditor, your Licensed Insolvency Trustee, or the Office of the Superintendent of Bankruptcy can object to your discharge. If that happens, the court holds a hearing to decide whether you can be discharged and on what terms.
Incomplete bankruptcy duties
If you have not completed all required duties, such as filing monthly income reports, attending counselling sessions, or providing income statements, your discharge does not happen automatically.
Your case goes to court, where a judge decides what happens next. The judge can give you more time to finish what is outstanding before granting the discharge.
Large CRA tax debt
If you owe $200,000 or more in CRA debt, and that amount makes up at least 75% of your total unsecured debt, the court must review your discharge. The judge looks at your cooperation with the process and your ability to repay before setting a discharge date.
Source: Government of Canada – Bankruptcy and Insolvency Act, Section 172.1
What are your bankruptcy duties?
You must complete a set of duties before the court will discharge you from bankruptcy. These are required by law under the Bankruptcy and Insolvency Act.
Your duties include making all required payments toward your bankruptcy, providing proof of income and expenses each month, surrendering any assets not protected by provincial exemption laws, and handing over your credit cards to your trustee for cancellation.
You also need to attend a meeting of creditors if one is called, supply your trustee with documents like income tax returns and insurance policies, and attend two mandatory financial counselling sessions.
Once you complete all your duties, the debts included in your bankruptcy are discharged.
What happens if your bankruptcy is not discharged?
An undischarged bankruptcy creates serious long-term problems. Without a discharge, you lose creditor protection. Creditors can resume collection calls, garnish your wages, or take legal action for the original debts.
Under the Bankruptcy and Insolvency Act, you cannot borrow $1,000 or more without telling the lender you are an undischarged bankrupt. Most lenders decline applications from undischarged bankrupts, making mortgages, car loans, and credit cards difficult to get.
Source: Government of Canada – Bankruptcy and Insolvency Act, Section 199(b)
Your credit report continues to show an active bankruptcy indefinitely, rather than the standard 6 to 7 years from the discharge date. Completing your duties is the only way to get your discharge and move forward.
How long does bankruptcy stay on your credit report?
A first bankruptcy stays on your credit report for 6 to 7 years after the date of discharge. A second bankruptcy remains for 14 years after discharge.
| Bankruptcy | Time on credit report |
|---|---|
| First | 6 to 7 years after discharge |
| Second | 14 years after discharge |
You can start rebuilding your credit as soon as you receive your Certificate of Discharge. Payment history makes up 35% of your credit score, so paying every bill on time is the most effective way to rebuild.
Source: Moses Advisory Group – How Long Does Bankruptcy Stay on Your Credit Report in Canada?
Secured credit cards are a common starting point. You put down a deposit that sets your credit limit, and all payments are reported to the credit bureaus. After 12 to 18 months of consistent on-time payments, you may qualify for an unsecured card.
Is a consumer proposal a better option than bankruptcy?
If your income is steady or you have assets you want to keep, a consumer proposal is worth looking at.
It’s a legal agreement under the Bankruptcy and Insolvency Act in which you repay a portion of your unsecured debt over up to 5 years, and your creditors forgive the rest.
A key difference is that a consumer proposal has no surplus income rules. Your monthly payment is set at filing and stays the same, regardless of your earnings. You keep your assets, and creditor protection starts immediately.
A consumer proposal stays on your credit report for 3 years after completion, compared to 6 to 7 years after discharge for a first bankruptcy.
A Licensed Insolvency Trustee can review your income, debts, and assets to tell you which option fits your situation. The initial consultation is free and confidential.
Talk to a Licensed Insolvency Trustee
If you are not sure whether bankruptcy is right for you, a Licensed Insolvency Trustee can review your income, debts, and assets and tell you exactly how long your bankruptcy would last. The consultation is free and confidential.
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Frequently asked questions
How long does a first-time bankruptcy last in Canada?
A first bankruptcy lasts 9 months if you have no surplus income, or 21 months if your income exceeds the government threshold by $200 or more per month. You must complete all your bankruptcy duties to be eligible for discharge at the end of that period.
Can bankruptcy last longer than 21 months?
Yes. A second bankruptcy lasts 24 to 36 months. A third bankruptcy takes at least 36 months and requires a court hearing before discharge. Incomplete duties, creditor objections, or large CRA tax debts also extend the length of your bankruptcy.
What is surplus income in a Canadian bankruptcy?
Surplus income is the amount your household earns above a threshold set by the Office of the Superintendent of Bankruptcy. As of 2025, the threshold for a single person is $2,666 per month. If you exceed the threshold by $200 or more, you pay 50% of the excess into your bankruptcy estate.
What happens if I do not complete my bankruptcy duties?
Your discharge is delayed. Instead of an automatic discharge, your case goes to court. A judge decides the next steps, which can include giving you more time to complete your duties or imposing additional conditions.
How soon can I rebuild credit after bankruptcy?
You can start rebuilding your credit as soon as you receive your Certificate of Discharge. A secured credit card is a common starting point. After 12 to 18 months of on-time payments, you may qualify for an unsecured credit card.
Does bankruptcy clear all my debts?
No. Bankruptcy clears most unsecured debts, including credit cards, personal loans, and lines of credit. It does not eliminate child support, spousal support, court fines, fraud-related debts, or student loans if you have been out of school for fewer than seven years.
What is the difference between bankruptcy and a consumer proposal?
In bankruptcy, surplus income rules apply, some assets are surrendered, and the process lasts 9 to 36+ months. In a consumer proposal, your payments are fixed, you keep your assets, and you can repay your debts for up to five years. Both are administered by a Licensed Insolvency Trustee.
How long does bankruptcy stay on my credit report in Canada?
A first bankruptcy stays on your credit report for 6 to 7 years after the date of discharge. A second bankruptcy stays for 14 years after discharge.