How Long Do You Pay for Bankruptcy in Canada — Everything Explained
November 04, 2024
Introduction to How Long Do You Pay for Bankruptcy in Canada
If you’re overwhelmed by debt, you may be asking yourself how long do you pay for bankruptcy in Canada and what it means for your financial future. Bankruptcy can help you reset your finances, but the process has specific payment timelines, requirements, and long-term credit effects.
In this guide, FatCat Loans explains how long bankruptcy payments last, what determines your repayment term, and which alternatives could help you regain stability faster.
Key Highlights to How Long Do You Pay for Bankruptcy in Canada
→ How long do you pay for bankruptcy in Canada depends on your income and whether it’s your first or second filing.
→ The typical bankruptcy period lasts 9 to 21 months for first-time filers.
→ Second bankruptcies may extend to 24–36 months.
→ Bankruptcy affects your credit report for 6–14 years, depending on the case.
→ FatCat Loans offers debt relief options to help you rebuild without filing bankruptcy.
Understanding How Long Do You Pay for Bankruptcy in Canada
Bankruptcy in Canada is a legal process under the Bankruptcy and Insolvency Act (BIA) that helps individuals eliminate unsecured debts such as credit cards, payday loans, and personal loans when they can’t afford to pay them back.
When you file, you must work with a Licensed Insolvency Trustee (LIT) who handles the process. You’ll make monthly payments for a set period, attend credit counselling, and report your income regularly.
👉 Learn more from the Office of the Superintendent of Bankruptcy Canada (OSB).
How Long Do You Pay for Bankruptcy in Canada — The Timeline
The payment period for bankruptcy depends on your income level, surplus income, and whether it’s your first or second bankruptcy.
| Type | Duration | Conditions |
|---|---|---|
| First bankruptcy (no surplus income) | 9 months | Must attend counselling and report monthly income. |
| First bankruptcy (with surplus income) | 21 months | Extended due to higher income levels. |
| Second bankruptcy (no surplus income) | 24 months | For repeat filers with limited income. |
| Second bankruptcy (with surplus income) | 36 months | Longest period, based on financial situation. |
Your surplus income (money above government-set thresholds) plays a major role in determining how long you pay for bankruptcy in Canada.
You can review official income thresholds at the OSB’s Surplus Income Guidelines.
What Happens During the Bankruptcy Period
Throughout the payment term, you must:
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Make all required monthly payments.
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File monthly income and expense reports.
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Attend two mandatory credit counselling sessions.
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Cooperate with your Licensed Insolvency Trustee.
Once you meet these obligations, you’ll receive a Certificate of Discharge, officially releasing you from most debts.
How Long Do You Pay for Bankruptcy in Canada – Stays on Your Credit Report
Even after completing payments, bankruptcy stays on your credit record:
| Filing Type | Duration on Credit Report |
|---|---|
| First bankruptcy | 6 years after discharge (Equifax), 7 years (TransUnion) |
| Second bankruptcy | 14 years after discharge |
Checking your credit regularly helps monitor recovery. Visit FatCat Loans for your free credit reports and updates.
Alternatives to Bankruptcy in Canada
Before committing, consider alternatives that may shorten your financial recovery period.
1. Consumer Proposal
A legal alternative to bankruptcy that allows you to repay a portion of your debt over 3–5 years with protection from creditors.
✅ Avoids asset loss and long-term credit impact.
2. Debt Consolidation Loan
Combine multiple debts into a single monthly payment at a lower rate.
✅ Simplifies repayment and helps rebuild credit faster.
Explore Debt Consolidation Loans with FatCat Loans.
3. Credit Counselling or Debt Management Plan
Work with non-profit credit counsellors to negotiate lower payments and waived interest.
✅ Keeps bankruptcy off your record entirely.
How FatCat Loans Helps Canadians Avoid Bankruptcy
At FatCat Loans, we understand that life happens — and sometimes debt becomes overwhelming. That’s why we offer fast, flexible financial solutions designed to help you take control before bankruptcy becomes necessary.
With personal loans and debt consolidation options, you can:
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Simplify your payments into one manageable plan.
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Protect your credit rating.
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Avoid the long-term effects of bankruptcy.
Frequently Asked Questions (FAQs) About How Long Do You Pay for Bankruptcy in Canada
1. How long do you pay for bankruptcy in Canada for first-time filers?
Usually 9 to 21 months, depending on your income and surplus payments.
2. What happens if I miss a bankruptcy payment?
Missing payments may delay your discharge or cause your bankruptcy to be extended. Always communicate with your trustee if you’re struggling.
3. Can I file bankruptcy twice in Canada?
Yes, but the second bankruptcy lasts longer (24–36 months) and affects your credit for up to 14 years.
4. Does bankruptcy clear all types of debt?
No. Student loans under 7 years old, fines, alimony, and child support are not discharged.
5. What’s the fastest way to recover from bankruptcy?
Pay all required amounts on time, rebuild credit with small loans, and monitor your credit report regularly.
Conclusion
Understanding how long do you pay for bankruptcy in Canada helps you prepare for what’s ahead and explore smarter ways to rebuild your financial future. While bankruptcy offers a fresh start, it comes with long-term effects — so it’s important to consider all your options before filing.
For many Canadians, a debt consolidation loan or consumer proposal offers a faster, less damaging alternative to bankruptcy — and FatCat Loans can help you find the right solution.
💡 Struggling with debt but want to avoid bankruptcy?
Apply for a FatCat Loans Debt Consolidation Loan today and explore faster, more flexible ways to manage debt and protect your financial future.
