On the day you file for bankruptcy, there is an automatic “stay” which prevents your creditors from collecting money directly from you. However, your creditors still exist; your debts don’t go away until you receive your discharge.
That’s why your discharge is so important, because it’s necessary to eliminate your debts.
How Long Will I Be Bankrupt?
Most bankrupts will be eligible for an automatic discharge after 9 months. The length of your bankruptcy may change under certain circumstances and can be quite confusing. There are three main factors that affect the length of your bankruptcy:
If you have been bankrupt before.
If you have been bankrupt before you will not be eligible for a discharge in 9 months. Your bankruptcy will be extended. If you are a second time bankrupt your bankruptcy will extend for 24 months.
If you have surplus income.
If your surplus income exceeds the minimum amount set by the government your bankruptcy can be extended for a longer period of time. If you are a first time bankrupt and your surplus income is too high you may not be eligible for an automatic discharge for 21 months (as opposed to 9 months). If you are a second time bankrupt, your bankruptcy period will be extended from 24 months (no surplus income) to 36 months (you have surplus income).
We can summarize these time periods is the following table:
| Automatic Discharge Period | No Surplus Income | Surplus Income |
|---|---|---|
| First Time Bankrupt | 9 months | 21 months |
| Second Time Bankrupt | 24 months | 36 months |
If you are not eligible for an automatic discharge.
If this is your first or second bankruptcy, you are eligible to receive an automatic discharge based on the conditions noted earlier. There are, however, a few reasons why you would not receive an automatic discharge the most common of which are:
- You did not complete your duties. This is the most common reason why people do not receive an automatic discharge. If you did not provide the trustee with proof of your income each month, or if you did not attend your counselling sessions, or provide your tax information, or make the required payments, you are not eligible for an automatic discharge. You will be required to go to court and explain to the Registrar (bankruptcy judge) why you did not complete your duties.
TIP: Complete your duties! If you are having problems, speak to your trustee immediately. - One of your creditors (the people you owe money to) opposes your discharge. This is a rare occurrence, but it could happen if the creditor believes you have not completed your duties, or if they believe that instead of filing a bankruptcy you should have filed a consumer proposal. If they object, a court hearing is held, and the court will decide whether or not you will be discharged.
- For a third bankruptcy you are required to go to court to be discharged.
Again, be sure to complete all of your duties so that you receive your discharge from bankruptcy, and officially eliminate your debts.
Ask A Trustee
If you are considering filing for bankruptcy our trustees can answer any of your questions about how long you will be bankrupt and your bankruptcy discharge. Contact a bankruptcy trustee near you.