For most people, filing for bankruptcy is a “once in a lifetime” event. Unfortunately, sometimes things happen and you may be finding yourself once again facing financial hardship and looking at the possibility of filing bankruptcy a second time. If so, you are not alone. Approximately 10% of bankruptcies are for individuals who, for one reason or another, needed to file bankruptcy more than once.
Consequences of Filing Bankruptcy More Than Once
There are, however, implications and consequences of filing bankruptcy more than one time.
One of the most serious implications of a second bankruptcy is that you will be bankrupt for a longer period of time. The first time you file bankruptcy you are eligible to be automatically discharged from bankruptcy in nine months (or 21 months if you have surplus income). In a second bankruptcy the length of bankruptcy increases to a minimum of two years, and increases to three years if you have surplus income.
A second bankruptcy will also have an impact on your credit report. The major credit reporting agencies in Canada generally report a first bankruptcy for six or seven years after the date of discharge. A second bankruptcy can remain on your credit report for up to 14 years, or twice as long as a first bankruptcy. That can negatively impact your ability to borrow in the future.
How often can you file bankruptcy? It is possible to file bankruptcy for a third time, but if you do you will be required to attend a discharge hearing in bankruptcy court. You will be required to explain to the judge why you filed bankruptcy three times, and it will be up to the court to decide if and when you get discharged. The court could impose conditions on your discharge, such as holding your bankruptcy open for an extended period of time, or requiring you to make additional payments. A third bankruptcy is something to avoid.
Consider a Consumer Proposal
What are your options if you have declared bankruptcy in the past, and you have new debts? To avoid the additional costs and consequences of filing bankruptcy more than once you could consider a consumer proposal as a way to negotiate a settlement with your creditors. You will avoid a repeat bankruptcy but still find a solution to your current financial problems.
If you find yourself facing the possibility of filing bankruptcy a second or third time, contact a trustee in bankruptcy and ask them about your alternatives.
I live in Prince Edward Island. I filed for bankruptcy in 2011. However, over 30,000 in government debt was not discharged in my original bankruptcy. These were student loan debts and as a result I still have these debts after the first bankruptcy as it was only 6 years since I ceased to be a student. I don’t want to apply to have the debt discharged by a court because I don’t want to lose my car, but I also still do not have the financial means to pay the payments Revenue Canada is asking per month to pay these debts. It has now been over 7 years since I ceased to be a student, and like I said I want to keep my car as I will need it to get back and forth to work, my wife doesn’t have a license, and I have a 15 year old and a baby due this month. Therefore, my question is can I file for bankruptcy a second time to both prevent a wage garnishment from Revenue Canada and to get this debt discharged while keeping my only vehicle. At this point I am not as concerned with the length of a second bankruptcy or how it will affect my credit rating as I am in trying to discharge this debt and keep my car. Also, is there a time I have to wait between my first bankruptcy to when I can file for bankruptcy a second time, and if so, what is that time frame. Please help me answer these questions. Thanks.
I am sorry, but who told you that you would lose our car if you apply to the Court to have the student loans retro-actively included in your first bankruptcy? I have never heard of anything like that. The purpose of the hearing is for the Court to determine whether or not you have the ability to repay any portion of your student loan. Unless you decide to sell your car to raise the money, your car should have nothing to do with the hearing. I think you may want to look into this solution a bit further.
To answer your question, you have the right to file a second bankruptcy as soon as you are discharged. You don’t have to wait at all. Having said that, if for some reason you end up in Court at the end of your second bankruptcy, the amount of time between your first and second filing will be taken into account (used against you). A second bankruptcy will definitely stop a CRA wage garnishee.
I filed for bankruptcy in 2005, Ive done well until the past few years where Ive been using credit to cover costs, and took out a loan to settle my student loan which wasn’t included in my first bankruptcy. Now Im approximately 27,000.00 in debt again and looking at debt settlement and/or bankruptcy. If I don’t care about it being on my credit report for 14 yrs are there any other reasons why I shouldn’t claim bankruptcy to alleviate the medical stress this is putting on me?
In addition to the 14 years a second bankruptcy is on your credit report, there may be other negative consequences, such as the requirement to pay surplus income.
You are correct that the positive is that your debts are eliminated, which may be the most important factor in your situation. I suggest you contact a licensed bankruptcy trustee for a no charge initial consultation to review your situation and examine the alternatives, which may include filing a consumer proposal to avoid a second bankruptcy.
Did bankruptcy in 2006, since then I have gotten a house, new vehicle, but due to some health issues I have had a decrease in salary from work over 600 dollars a month, now my ex is coming after child support due to one of the older kids moving out. We are doing credit counselling right now and are still struggling still getting collections letters even tho the credit counselling is supposed to be taking care of that, what are my options for bankruptcy will I lose my car and will it effect if I wanted to sell my house in a few years and downsize
Hi. Without knowing the details it is impossible to answer your question. Whether or not you can keep your car or house in a bankruptcy depends on the value of the asset, the amount owing on it, and which province you live in. I suggest you contact a trustee to arrange for a no charge initial consultation to review your options. As this would be your second bankruptcy, you would be bankrupt for a minimum of 24 months, so it may also be prudent to consider a consumer proposal as an alternative to bankruptcy.
I have an outstanding balance for my income tax. Most of the balance is CPP remittance. I’m self employed and had a serious reduction in income. Will I be able to use a consumer proposal to reduce or eliminate my income tax/CPP balance. I’m self employed.
Hi Randy. Yes, if CRA accepts your proposal, it would take care of all tax debts, including CPP. CRA is strict when accepting proposals, so you should consult with a trustee to determine what amount you would likely have to offer to get CRA to accept a proposal.
I claim bankruptcy long time ago when I was younger, had a full discharge… few years ago I got in trouble again …. I owe credit card money and tax of 7 000, my car value is about 6 000 still have 1 years to pay for it… will I lose my car if I decide to claim bankruptcy I’m not to sure what to do right now should I do a customer proposal… with all my card and my income tax I own probably 30 000 in debt.
Also If I have a roommate I don’t want to involve him in this will this cause problem for him?
Hi Nath. Your roommate will not be directly impacted by this, unless they also signed for your debts.
You can file a consumer proposal or bankruptcy and keep your car, provided you continue to make your loan payments. You could also decide to surrender the car, and any shortfall would be included in your consumer proposal or bankruptcy.
As to whether you should do a consumer proposal or bankruptcy, that is something you should discuss with a licensed trustee before making a decision. Here’s a link to arrange a free initial consultation: http://bankruptcy-canada.com/contact-a-trustee/
You should ask your trustee to explain the implications of a second bankruptcy, which is why in your case a consumer proposal may be the preferred option.
I initiated a second bankruptcy 7 years ago. I then had to leave the country and did not make any payments to my trustee. I missed the court date. I now would like to return to Canada. What do I need to do? Am I facing criminal proceedings. I forgot to mention, I’m still broke….
Hi John. Not paying for your bankruptcy is not a criminal event. You should contact your trustee to determine what you need to do to get your discharge. Another court hearing will be required, so you will need your trustee to tell you what duties are outstanding to allow you to get your discharge.
hello i claimed bankruptcy in ontario in 2006 because of student loans from 1998. at the time the length was 10 years before bankruptcy would wipe the debt, the trustee told me after discharge the rules would change to 7 years which it didand i could get the debt wiped in court or annulled, but when i went to see him he retired and nobody would help at his office. Today i still have the student debt and i haven’t done taxes since 2007 because they would just take the money. I am unemployed and havent had a job since 2013 =0 income, i have been living off credit cards but the debt is accumulating quickly and i cant even afford to do my taxes….is there anyway i can get my loan included in my last bankruptcy so i can do my taxes get the money which i would assume would be about 4000 in refunds and pay my credit card debt and i can afford a car to get a job? please help 🙁
Since your student loans were not discharged in your original bankruptcy, only the bankruptcy court can discharge them. You would need to make an application to court and if the court agrees, your loans would be discharged. Your other option would be to file a consumer proposal or a second bankruptcy to deal with the loans. A trustee or a bankruptcy lawyer can provide you with further information.
Hi, I am in a pickle to clam bankruptcy or not, the wife says you will go to jail after the third bankruptcy. I don’t know what to do? I now live in BC and the House is in NB, so are my credit cards. Thank you for any response.
Hi Merv. It’s not a criminal offence to go bankrupt, so no, you won’t go to jail. However, with a third bankruptcy a court hearing is required, and it is likely that you will be bankrupt for an extended period of time, perhaps two to three years, or longer. For that reason a consumer proposal may be a better option to avoid a third bankruptcy.
Since you live in BC, you should talk to a British Columbia bankruptcy trustee to review your options.
Hi I am wondering about what my options are when it co Es too owing a mortgage on a property and owing property tax for that property… I already bankrupted twice and wanting too avoid the third time… The house is owned by my ex husband and myself … He doesn’t want anything too do with it and I am unable to pay off the property tax owing alone ….. What are my options please help?!!!
Hi Jennifer. The answer will depend on the value of the house, and the amount owing on the mortgage and property taxes. If you can sell the house and pay off the mortgage and property taxes, that would be the simplest option. A licensed insolvency trustee can discuss your options in more detail, which may include filing a consumer proposal as a way to avoid bankruptcy.
My second bankruptcy was in 2001, when the market crushed. I took early retirement in 2013 because of a bad back. With limited pension income, I have spend all my saving and rrsp. I have now maxed out all my credit cards and line of credit, total debts over $100,000. How do I get out of this one. I am currently looking for full time / part time employment.
Michael: You could do nothing until you are working (since you have no wages to garnishee if you are not working). Once working you could either file a third bankruptcy (which will last for many years, and will require a court hearing to get your discharge), or you could file a consumer proposal to avoid a third bankruptcy (if you have an income and therefore have something to propose with).
Hi. I have had two prior bankruptcies. I am currently on Disability CPP. I am worried and nor sleeping thinking about taxes owed. Apparently being found disabled by CPP does not qualify as disabled to the CRA so getting hit with taxes owed and bills. Heck my old car got towed when I took Ill ended up in hospital. Now the tow company wants a couple grand to even take my car. It’s a 98.
Can my CPP be garnished by the CRA? I am terrified that I will end up ill and with nothing to live on
It is theoretically possible for CRA to garnishee CPP, although that is rare. You should consult with a licensed insolvency trustee to determine your options.
My fiancee is going to claim a bankruptcy. It is her first. She has her own income, I have my own income. We are not married. Will I be involved in her bankruptcy in any way? It is all her debt and nothing to do with me.
We are getting married in the fall. After that I will be claiming my 2nd bankruptcy. Will her income have any influence on my bankruptcy? She said if my debts cause her any issue we won’t be getting married. In other words, it is my problem and she doesn’t want a thing to do with my debt or paying it back.
Hi Dale. Surplus income is calculated based on the size of your family, and includes all family income. For the first few months of her bankruptcy your fiancee is single, so your income has no impact. Once you are married your income will impact her calculation, and vice versa.
However, the family limit size also increases when married. So, to determine if your marriage will have any impact on your bankruptcies, I suggest you contact a licensed insolvency trustee for a no charge initial consultation.
I was talking to a friend the other day who had filed bankruptcy a few years ago. They had a student loan that was supposed to be included in the bankruptcy. During her time in bankruptcy the government did not ask for money to be paid and they accepted the bankruptcy payments over that time, she has even received a tax return this year. Since she was released and she filed her taxes this year they have since contacted her looking for payments to resume. They are claiming that this loan was not included in her bankruptcy. In 2013 when she declared bankruptcy they are telling her that she filed too early. Can you tell me how long after the her classes was she supposed to wait to file? Her bankruptcy trustee said they filed properly, but the government is telling her they didn’t.
Hi Tracey. A student loan is only automatically discharged if more than seven years have elapsed since you ceased to be a student. Here’s an article that explains the 7 year student loan rule.
Hi there, I had a bankruptcies in AB and was discharged in 1996 and am now in Newfoundland and facing a hardship.
Does the government know if you have already declared one?
Where is this information stored?
Thanks for answers on silly question lol
Hi Kalyne. Bankruptcy is a federal process, so it doesn’t matter what province you filed in, or where you are living now. All bankruptcy and consumer proposal filings are stored with the Office of the Superintendent of Bankruptcy, a division of the federal government. For an $8 fee you can do a search to see if a bankruptcy is in the system by following this link: https://www.ic.gc.ca/app/scr/bsf-osb/ins/login.html?lang=eng
I claimed bankruptcy back in 2000. Consumer proposal in 2008-9 ish.. struggling again.. what are my options and how long for the negative impact from another proposal or bankruptcy?
Hi Rob. A second bankruptcy remains on your Equifax credit report for 14 years, regardless of any proposal filings. Equifax does not have a specific rule for a second proposal filing, so in most cases a second proposal would remain on your credit report for three years after you make your final payment.
I claimed bankruptcy once and then a purposel I still can not catch up it was for a small business does the purposel count as a 2nd bankruptcy and can they go after the house its under my wife I have nothing to do with the mortgage thank you
Hi Tom. A consumer proposal does not count as a second bankruptcy, so if you were to file bankruptcy again you would be considered a second time bankrupt.
I had a second bankruptcy in 2015 and discharge in March 2107. There was an old CIBC student loan from 1995 or 1996: that was not on that bankruptcy, and now they are calling as I forgot and didn’t have any information on it when I filed in 2015. I don’t want to file for a third bankruptcy, so is there anyway I can do a Consumer Proposal? Thanks
If the student loan existed in 1996 it is automatically included in your 2015 bankruptcy. I suggest you contact your trustee and ask them to send the information to CIBC; it is not necessary to file a consumer proposal.
One of our family members is 65 and unable to work due to health problems. He has filed bankruptcy twice. He is now back in debt and struggling to make ends meet. Can he claim bankruptcy a third time? The only income he has is is OAS and CPP. What kind of options does he have?
Hi Laurie. If your family member is unable to work they have no wages, so the creditors cannot garnishee their wages, so they could open a new bank account and do nothing further. If they file bankruptcy a third time they are required to attend a discharge hearing in bankruptcy court, and the bankruptcy will last for a minimum of two years, probably longer, so given their situation a bankruptcy is likely not the optimal solution.
I ran into serious financial problems with a small business due to incompetent account over several years. The accounting was so bad the CRA did not apply any fines and actually said that they felt bad for me… I had some credit card debt too. $100,000 in debt to the CRA and approx $15,000 in credit card debt, I took out a consumer proposal which brought the debt down to approximately $45,000 (ish) and I honoured that until this year because things slowed and I was drowning again – I went bankrupt this past June.
I take no shame in doing this because I had no chance of clearing the debt and no individual was caused any problems or out of pocket, only the bank credit card and CRA… No letters, no calls, I pay my fees to my trustee and take home a nominal amount and I will be discharged early 2020. I doubt very much that I will be in this position again after making adjustments.
I would warn people though, I have had the bank recently (today) threaten me with all kinds of legal action and frozen my bank account the day my monthly pay was deposited into the bank account… Apparently, this is not legal under my bankruptcy and now my trustee is going to contact the bank and reassert my position and have the account unfrozen…
I’ve learned that the parameters and rules within the parameters are put in place because they work to the advantage of the financial powers that be, however, flip the script and utilize those rules for your own personal advantage and they are ignored.
The CRA, ICBC, WorkSafe, all these institutions that bleed us of money are like the casino and the house, one way or another, almost always wins… Remember that.
I’ve posted Mike’s comments as a “cautionary tale” – there is some truth to what he says about the “house always wins”. T
I have gone bankrupt for the third time in 2016 due to financial turmoil and the loss of my spouses job. Since filing I have since run into a worse situation finacially than I was back in 2016. My spouse has had to go on disability which has resulted in less than 3/4 of his pay. I have not been able to make any of my payments to my trustee (who also has told me I had to pay a surplus income payment). Since the start I have told my trustee the payments were too high. I’m in my third year of payments now and the term will end in July 2020. I really need advice on our to address this situation as I’m so worried my own wages will be garnished and force us to go on welfare.
Hi Kathy. Since your trustee is aware of your situation, you should book a meeting with your trustee (not their administrator, but the actual trustee) and ask them to review your options for discharge and help you make a plan to complete the bankruptcy.
Hello, In the past I have claimed 2 bankruptcies. The second one being over 14 yrs ago. Due to economic stress, everything is expensive here, and due to getting in debt AGAIN to the tune of approx. $50000, I would like to claim again for the third time. Is it possible to include, along with credit cards and line of credit, any tax money I owe, and any E.I. overpayments I owe? And would I have to give my motorcycle? I still owe about $3500 on it.
Hi Kraig. Yes, it is possible to file a bankruptcy a third time, but it is a complicated process, and a court hearing would be required to obtain your discharge. A consumer proposal may be a better alternative to avoid a third bankruptcy if possible. You should book a meeting with a Licensed Insolvency Trustee to review your situation and determine next steps.
I have claimed bankruptcy twice in the past, First time was in the
early 90sDue to sickness.Second time was around 2002 due to a injury
and trouble getting sick benifets from work.Everything was going great
until my wife was diagnosed with cancer 2014.She passed away 2015.
Since then everything has been a blur to me.I am 66 years old approx
26,000 dollars in credit card debt. My only income is oas cpp guarenteed income.
Dont know what to do.
Hi Victor. I am sorry to hear about your situation. A third bankruptcy is very complicated; it will last for at least two years, probably much longer, and a court hearing is required for you to get discharged. If you are retired and don’t have any wages that can be garnisheed, you could open a new bank account at a new bank and tell the credit cards that you can’t pay them. A licensed insolvency trustee can review your situation and give you more specific advice.
I was bankrupt approx 20+ years ago, then had to do a consumer proposal a few years later, after that. I find myself in financial dire straits and I am considering a consumer proposal because I want/need to retire soon (health) and income would be reduced. Do I have to go in front of a Judge this 3rd time, for a discharge? Do all applications go before a Judge regardless? or does the Trustee file on-line direct with the court? I also am a gov’t employee (union) and want to know if my employer would become aware and if so, can they ‘fire’ me? I am so stressed!! Any info/direction is appreciated.
There is no requirement to appear in Court when you file a proposal so unless one of your creditors accuses you of some form of inappropriate conduct you should never see a Courtroom. Even if you decide to file a second bankruptcy you will only be required to appear in Court if you fail to complete your required duties and/or a creditor asks for you to go before a judge. It doesn’t happen very often…
I’m considering a Consumer proposal. Will I be charged a income surplus at the end of the consumer proposal? Or will I only have to do a monthly payment for a set period of time and be aloud to earn as much money as possible without loosing half of it at the end of the term?
There is no income reporting and/or surplus income payments if you file a consumer proposal. The payment terms are agreed to up front and once you complete them the debts are gone. If you income goes up the payments remain the same – if your income goes down your payments remain the same.