Personal Bankruptcy FAQs Ontario
Common Questions Answered
Get clear answers to common questions about personal bankruptcy in Ontario, including your debts, assets, home, car, credit, costs and what happens before and after you file.
Answers reviewed by Mark Morgan, Licensed Insolvency Trustees at David Sklar & Associates.
Last reviewed September 2026
Getting Started With Personal Bankruptcy in Ontario
What Is Personal Bankruptcy?
Personal bankruptcy is a legal debt relief process that can eliminate many unsecured debts you can no longer afford to repay. It is administered by a Licensed Insolvency Trustee under Canada’s Bankruptcy and Insolvency Act.
Who Qualifies for Personal Bankruptcy in Ontario?
To file for personal bankruptcy, you generally must owe at least $1,000, reside, carry on business, or have property in Canada, and be unable to pay your debts as they generally become due or have debts greater than the fair value of your assets. A Licensed Insolvency Trustee can determine whether you meet the legal requirements.
How Do I File for Personal Bankruptcy in Ontario?
Personal bankruptcy is filed through a Licensed Insolvency Trustee. The Trustee will review your debts, income, expenses and assets, explain your options, and if bankruptcy is the appropriate solution, prepare the required documents and file the bankruptcy with the Office of the Superintendent of Bankruptcy.
How Long Does Personal Bankruptcy Last in Ontario?
A first bankruptcy can be completed in as little as 9 months if no surplus income payments are required. If surplus income applies, a first bankruptcy will last 21 months. A second bankruptcy can generally last 24 months, or 36 months if surplus income applies, provided the person qualifies for an automatic discharge and there are no objections or other complications.
How Much Does Personal Bankruptcy Cost in Ontario?
There is no single cost for every bankruptcy. The amount you may be required to pay depends on factors such as your income, family size, surplus income obligations and whether you own nonexempt assets. Your Licensed Insolvency Trustee can calculate the expected cost before you decide to file.
What Happens to Your Debts and Creditors in Bankruptcy?
What Debts Are Included in Personal Bankruptcy?
Personal bankruptcy can eliminate most unsecured debts, including credit cards, unsecured lines of credit, personal loans, payday loans and many tax debts. Your Licensed Insolvency Trustee will review each debt to determine how it will be treated.
What Debts Are Not Eliminated by Bankruptcy?
Some debts survive bankruptcy. These can include child or spousal support, court imposed fines or penalties, certain debts arising from fraud, and student loans when bankruptcy is filed within seven years of ceasing to be a student.
Can Income Tax Debt Be Included in Bankruptcy?
Yes. Many income tax debts owed to the Canada Revenue Agency can be included in a personal bankruptcy. If CRA has taken certain enforcement actions such as enhanced requirements to pay or registration on title to property, these debts may not be discharged through bankruptcy. It is important to deal with CRA debts in a timely manner to avoid these enforcement actions. The treatment can depend on the amount owed and your circumstances, so your Licensed Insolvency Trustee will review your tax debt as part of the assessment.
What Happens to Student Loans in Bankruptcy?
Student loans can generally be discharged if you file for bankruptcy at least seven years after you stopped being a full or part time student. In some hardship cases, you may be able to ask the court to reduce this period to five years.
Will Bankruptcy Stop Collection Calls?
In most cases, yes. Once personal bankruptcy is filed, a stay of proceedings generally prevents unsecured creditors included in the bankruptcy from continuing collection activity against you.
Will Bankruptcy Stop a Wage Garnishment?
In many cases, bankruptcy will stop a wage garnishment related to an unsecured debt included in the bankruptcy. Some obligations, such as certain support payments, may be treated differently, so your Licensed Insolvency Trustee should review the garnishment with you.
Can Creditors Still Contact Me After I File for Bankruptcy?
In most cases, yes. Once personal bankruptcy is filed, a stay of proceedings generally prevents unsecured creditors included in the bankruptcy from continuing collection activity against you.
What Happens to Your Assets in Personal Bankruptcy?
Filing for bankruptcy does not automatically mean losing everything you own. Ontario and federal laws protect certain assets, while other property may be affected depending on its value and your equity.
Will I Lose Everything If I File for Bankruptcy?
No. Filing for personal bankruptcy does not mean you lose everything. Certain assets are protected by Ontario and federal exemption rules, while non exempt assets may have to be surrendered or their value paid into the bankruptcy.
Can I Keep My House If I File for Bankruptcy in Ontario?
Possibly. Whether you can keep your home depends largely on the amount of equity you have in it and the applicable Ontario exemption. Your mortgage lender also keeps its rights as a secured creditor. A Licensed Insolvency Trustee can calculate your equity and explain your options before you file.
Can I Keep My Car During Personal Bankruptcy?
You may be able to keep your vehicle depending on its value, your equity and whether it is financed. Ontario provides an exemption for one motor vehicle up to a prescribed value. If your vehicle is financed, you will generally also need to remain current with the secured lender if you want to keep it.
What Happens to My RRSPs If I File for Bankruptcy?
Most RRSP and RRIF savings are protected in bankruptcy. However, contributions made during the 12 months before filing may not be exempt and could become part of the bankruptcy estate. Your Licensed Insolvency Trustee will review your registered savings before you file.
What Happens to My Tax Refund During Bankruptcy?
Tax refunds can be affected by bankruptcy. In many cases, income tax refunds relating to the year you file and certain prior years become part of the bankruptcy estate and are handled by your Licensed Insolvency Trustee.
What Are Bankruptcy Exemptions in Ontario?
Bankruptcy exemptions are rules that allow you to keep certain property up to prescribed limits. In Ontario, exemptions can apply to items such as necessary clothing, household furnishings, one vehicle, tools used to earn income and a certain amount of equity in your principal residence.
Income, Payments and Responsibilities During Bankruptcy
What Is Surplus Income in Personal Bankruptcy?
Surplus income is the amount your household income exceeds the income standard set each year by the Office of the Superintendent of Bankruptcy. If surplus income applies, you may be required to make additional payments during your bankruptcy and your bankruptcy may last longer.
How Is Surplus Income Calculated?
Your Licensed Insolvency Trustee reviews your family unit’s monthly income, eligible expenses and family size and compares the result with the Superintendent’s current income standards. If your calculated surplus income reaches the required threshold, a portion must be paid into your bankruptcy estate
What Happens If My Income Changes During Bankruptcy?
You must report material changes in your financial situation to your Licensed Insolvency Trustee. If your income increases or decreases, your surplus income calculation and required payments may change.
What Payments Will I Have to Make During Bankruptcy?
The amount you pay during personal bankruptcy depends on your individual circumstances. Payments can be affected by your income, family size, surplus income obligations and the value of any non exempt assets. Your Licensed Insolvency Trustee should explain the expected payments before you decide to file.
What Are My Duties During Personal Bankruptcy?
During bankruptcy, you have certain legal responsibilities. These can include providing financial records, reporting your income and expenses, making required payments, providing information about your assets, completing two insolvency counselling sessions and keeping your Licensed Insolvency Trustee informed of important financial changes.
Do I Have to Attend Counselling During Bankruptcy?
Yes. Individuals filing for personal bankruptcy are generally required to complete two insolvency counselling sessions. The sessions are designed to help you better understand money management, credit, budgeting and the financial circumstances that contributed to your debt problems.
Credit and Life After Personal Bankruptcy
How Does Personal Bankruptcy Affect My Credit Score?
Filing for bankruptcy will negatively affect your credit history and credit score. However, bankruptcy also allows you to deal with debts you cannot repay, and after your discharge you can begin rebuilding your credit over time by developing responsible credit and payment habits.
How Long Does Bankruptcy Stay on My Credit Report in Ontario?
For a first bankruptcy, Equifax generally removes the bankruptcy from your credit report six years after your discharge. In Ontario, TransUnion generally keeps a first bankruptcy on your credit report for seven years after discharge. If you have filed for bankruptcy more than once, the information may remain for 14 years after discharge.
Can I Get Credit After Bankruptcy?
Yes, it may be possible to obtain credit after bankruptcy, but approval is always determined by the lender. Your income, credit history, ability to repay and how you manage your finances after bankruptcy can all influence whether you qualify and the interest rate you are offered.
How Can I Rebuild My Credit After Bankruptcy?
Rebuilding credit takes time. You can start by paying bills on time, keeping credit balances low, reviewing your credit reports for errors and using any new credit responsibly. Consistent financial habits can gradually help strengthen your credit profile.
Can I Get a Credit Card After Bankruptcy?
It may be possible to qualify for a credit card after bankruptcy, although your options may initially be limited. Some people begin with a secured credit card or a lower credit limit and use it responsibly to begin rebuilding their credit history.
Can I Get a Mortgage After Bankruptcy?
Filing for bankruptcy does not mean you can never qualify for a mortgage again. Your ability to obtain a mortgage after bankruptcy will depend on factors such as how long it has been since your discharge, your rebuilt credit history, income, down payment, existing debts and the lender’s qualification requirements.
Family, Work and Privacy During Personal Bankruptcy
Does Personal Bankruptcy Affect My Spouse?
Your bankruptcy does not automatically make your spouse responsible for debts that are only in your name. However, if you share joint debts or jointly owned assets, your spouse may be affected. A Licensed Insolvency Trustee can review those obligations and assets with you before you file.
What Happens to Joint Debts If I File for Bankruptcy?
Bankruptcy can release you from many joint unsecured debts, but it does not release the other borrower or co signer from their responsibility. The creditor can generally continue pursuing the other person for the unpaid balance.
Will My Employer Know If I File for Bankruptcy?
Filing for bankruptcy does not mean your employer is automatically notified simply because you filed. However, your employer may become involved in certain situations, such as when a wage garnishment must be stopped. Some regulated professions or employment agreements may also have separate disclosure requirements.
Is Personal Bankruptcy a Public Record?
Yes. Bankruptcy filings form part of the public insolvency record maintained by the Office of the Superintendent of Bankruptcy. The records are searchable through the federal Bankruptcy and Insolvency Records Search service
Can I Continue Working During Bankruptcy?
Yes. Filing for personal bankruptcy does not prevent you from continuing to work and earn income. You will need to report your income to your Licensed Insolvency Trustee, and your income may affect any surplus income payments you are required to make.
Can I Be Self Employed or Own a Business During Bankruptcy?
Bankruptcy does not necessarily prevent you from earning self employment or business income, but there can be important restrictions depending on how your business is structured. For example, an undischarged bankrupt may be restricted from acting as a director of certain corporations. Your Licensed Insolvency Trustee should review your business structure with you before you file.
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