How many times can someone file for bankruptcy?
In life, unforeseen things can happen, either a lost job, unexpected injury, or more debt than you are able to manage. For the majority of people that do file for bankruptcy, this tends to be a one-time deal. There are times when people do file a second bankruptcy in Canada. In this article, we explore some of the repercussions of filing bankruptcy more than once.
First bankruptcy in Canada
When someone goes bankrupt for the first time, they are eligible for an Automatic Discharge from their bankruptcy at the end of a 9-month period. This is extended to 21 months if there is surplus income.
Bankruptcy and surplus income
Going over the surplus income limit does not mean you have to hand over everything. The money you earn beyond the surplus income limit is charged at a rate of 50 percent, so half of your surplus income is paid to the bankruptcy trustee. The bankruptcy trustee disburses that income to the creditors, much like your assets. Surplus income is calculated after tax.
Surplus income can also increase the length of time you are in bankruptcy. If surplus income exists, the length of the bankruptcy may be increased from 9 months to 21 months for first-time bankrupts or from 24 up to 36 months for second-time bankrupts.
Second bankruptcy in Canada
If someone happens to go bankrupt for a second time, they will be bankrupt for a longer period of time. With a second bankruptcy, they are eligible for Automatic Discharge from their bankruptcy in 24 months. This is extended to 36 months if they have a surplus income.
An automatic discharge is issued to someone who has finished the necessary counseling and completed their legal requirements and the discharge is not disputed by a creditor, trustee, or the Office of the Superintendent of Bankruptcy.
How long will a bankruptcy stay on my credit report?
With a first bankruptcy, it can stay on your credit report/history for up to 7 years after you have been discharged.
With a second bankruptcy, the amount of time that it is on your credit report is doubled, (up to 14 years). This can greatly hinder your borrowing ability.
Can you file for a third bankruptcy?
It can be done, but you would need to attend a discharge hearing in Court and you will need to explain why you are filing again for a third time to the Judge. From there it is up to the Courts to determine when or if you can be discharged from your debts. There is a greater chance for conditions to be imposed.
While it is possible to go bankrupt three times, this is generally something you would want to avoid, and seek out alternate options to help avoid bankruptcy.
David Sklar & Associates can help!
If you are struggling financially and looking for debt relief, call David Sklar & Associates and book your free consultation today. We offer help to people who are drowning in debt and need an effective way out. You have options. We can help you pick the right ones and get the relief that you’re looking for
