Debt Relief Solution
Personal Bankruptcy in Canada: A Legal Reset
Strongest legal protection when repayment isn’t realistic.
See if bankruptcy fits your situation
We’ll connect you with a local Licensed Insolvency Trustee.
What It Is
What it is
- A federal insolvency proceeding under the BIA providing a discharge of most unsecured debts after legal duties.
- Filed/administered by an LIT and triggers a stay of proceedings that pauses most lawsuits and collections.
Advantages and Considerations
Advantages
- Immediate legal protection.
- Fresh start with discharge of eligible unsecured debts.
- Financial counselling included.
Considerations
- Possible surplus income payments under OSB standards.
- Asset exemptions vary by province/territory; some equity may be realized.
- Credit report reflects bankruptcy for 6–7 years after discharge (longer for repeats).
Eligibility Requirements
- Insolvent in Canada (owe at least $1,000 and can’t meet obligations when due).
- Consider alternatives first (proposal/DMP) with an LIT.
Costs & Fees
- Base costs + any surplus income (OSB Directive 11R2).
- Typical discharge: 9 months (no surplus, first‑time) or 21 months (with surplus).
Credit Impact
- Reported for 6–7 years after discharge depending on bureau/province.
- Rebuild with secured credit and on‑time payments post‑discharge.
Included and Excluded Debts
Understanding which debts qualify for this solution
Included Debts
- Most unsecured debts (credit cards, lines, many tax debts)
Excluded Debts
- Secured debts unless you surrender the asset
- Alimony/child support, court fines/penalties
- Student loans if < 7 years since end‑of‑study (possible court hardship after 5 years)
Check Bankruptcy Eligibility in Minutes
Enter estimated unsecured debt and income to explore whether bankruptcy might be appropriate.
!
No credit check. An LIT confirms obligations and alternatives.Step-by-Step Process
- Consult an LIT; confirm best option.
- File assignment → stay begins.
- Complete duties (income reports, counselling, tax filings).
- Discharge at 9 or 21 months (first‑time; varies otherwise).
Preparation Checklist
- Government ID
- Proof of income; recent tax returns
- Asset list; debt statements
- Any court/collection notices
Timeline and Duration
- Week 0–1: consult & filing
- Months 1–9/21: duties & possible payments
- Discharge: unsecured debts released (exceptions apply)
Alternative Solutions
- Consumer proposal (reduce amount; keep assets; legal stay).
- DMP or consolidation if you can repay with reduced interest.
Will I lose my car/tools? Provincial exemptions protect essentials within limits.
Can creditors sue me? Not without court permission once the stay is in place.
Important Warning
Beware of unlicensed ‘advisors’ charging large fees to refer you to an LIT. You can speak to an LIT directly.
Common Myths and Misconceptions
- Myth: Bankruptcy always takes years — Reality: First‑time with no surplus can discharge in ~9 months.
Provincial Variations
Debt relief rules differ by province. Expand any province to see key details and service-specific notes.
Alberta
British Columbia
Manitoba
New Brunswick
Newfoundland and Labrador
Nova Scotia
Ontario
Prince Edward Island
Québec
Saskatchewan
References
- OSB: Bankruptcy overview: https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-owe-money/what-expect-if-you-file-bankruptcy
- OSB Directive 11R2 (surplus income): https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/directive-no-11r2-2025-surplus-income
- OSB on stay of proceedings: https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/you-are-owed-money/you-are-owed-money-bankruptcy
- Equifax retention timelines: https://www.equifax.ca/personal/education/personal-finance/articles/-/learn/how-long-does-information-stay-on-my-credit-report/
- Ontario exemptions (example): https://www.ontario.ca/laws/regulation/050657