How Long Does Bankruptcy Last?
If you’re considering filing for bankruptcy, it’s likely you’re asking yourself, “How long does bankruptcy last?“ The amount of time you’ll be in bankruptcy depends on two things:
- Surplus income
- Prior Personal Bankruptcies
What is Surplus Income?
In an attempt to be fair to both creditors and debtors, the government has established income thresholds based on family size and location. Simply put, income that exceeds the threshold is known as surplus income. Each month that you’re in bankruptcy, you’re required to report your income to your trustee. If you have surplus income, a portion of it must be paid to the bankruptcy estate to pay your creditors some of what they are owed.
For some unfortunate few, bankruptcy is a process they’ll face more than once. In an attempt to discourage people from filing multiple bankruptcies, Canadian law requires repeat filers to remain in bankruptcy for a longer period of time.
How Long Will I Be in Bankruptcy?
If you have never declared personal bankruptcy and you have no monthly surplus income, you will be discharged from bankruptcy in as few as nine months. If you have monthly surplus income with no prior bankruptcies, you will remain in bankruptcy for a total of 21 months before being discharged. Those who are filing for a second time can expect to be in bankruptcy for a total of 24 months. For those declaring personal bankruptcy for a second time with monthly surplus income, it will be a full 36 months before being discharged. Obviously, the idea here is to discourage multiple personal bankruptcy filings. You should also bear in mind that a first time bankruptcy remains on your credit rating for six years after you are discharged but a second bankruptcy will be on your credit rating for fourteen years once you have been discharged. That said, a second bankruptcy filing may not be the best solution for some personal situations. So how long does bankruptcy last? In order to find out how long you will be in bankruptcy before you’re discharged, you should meet with a licensed trustee in bankruptcy. Consultations are free. After a review of your finances, your trustee will determine how long you’ll have to remain in bankruptcy before you get your fresh financial start.