Receiving a discharge from bankruptcy
Unfortunately, filing for bankruptcy and being released from your debt obligations does not happen overnight - rather, it is a process.
What does being discharged from bankruptcy mean?
The purpose of filing for bankruptcy and going through the bankruptcy process is to receive your bankruptcy discharge. This legal document declares that your debt is legitimately and permanently erased, which means you are no longer liable for the debts covered in your bankruptcy.
How long does bankruptcy last?
While this depends on individual circumstances, most first-time bankrupts will receive an automatic discharge nine months after they declare bankruptcy, unless it is opposed (by a creditor, the trustee or the Superintendent of Bankruptcy). The length of your bankruptcy period can depend on a few factors, including whether you have surplus income, or are filing for bankruptcy for a second or third time.
First bankruptcy: If you are filing for bankruptcy for the first time, did not have to make surplus income payments, and have completed all of your bankruptcy duties, you will be eligible for an automatic discharge from bankruptcy after nine months. If you had surplus income, you will be in the bankruptcy period for a total of 21 months.
Second bankruptcy: If you were previously bankrupt with no surplus income payments, you will be eligible for an automatic discharge from bankruptcy in 24 months. If you have surplus income, that period is extended to 36 months.
Third bankruptcy: If you are filing for bankruptcy for a third time, you will not be eligible for an automatic discharge. Your trustee in bankruptcy will apply to the courts to hear your request for discharge and your file will be reviewed by the courts, which will set certain conditions for your discharge. These conditions could involve a bankruptcy period of at least 24 months if there is no surplus income, or 36 months if the bankrupt has surplus income.
After these defined periods of bankruptcy, you will be discharged from bankruptcy and you can start re-building your credit with a fresh start, clear of debt. BDO’s team of experts will assist you with financial planning, budgeting and debt management strategies to keep you on the road to financial freedom.
Can a discharge from bankruptcy be opposed?
It is possible for your discharge to be opposed by a creditor, your trustee or the Superintendent of Bankruptcy. This usually happens if you have not fulfilled your duties during the bankruptcy process, including:
Failing to pay the required payments
Not attending the required credit counselling sessions
Committing an offence related to your bankruptcy
An opposition to your discharge can also occur for various reasons:
You could have filed a viable consumer proposal, but instead chose to file bankruptcy; at the time of your consultation, your trustee in bankruptcy will let you know whether a proposal is a better option to help avoid this
Your bankruptcy was caused by gambling
You had excessive or unusual financial transactions prior to bankruptcy; a creditor may object if they suspect fraudulent activity
If your discharge is opposed, you will have to attend a hearing in bankruptcy court to find out the conditions of your discharge.
What happens after I am discharged from bankruptcy?
When you are discharged, you will receive one of four types of release from your debts:
Absolute discharge — You will be released from the obligation to repay the debts you had as of the date your bankruptcy was filed, except for certain types of debts that are excluded
Conditional discharge — You are required to fulfill certain conditions prior to obtaining your absolute discharge (typically, you will be required to pay a certain amount of money; however, the court may also impose other types of conditions - once these are met, an absolute discharge will be granted)
Suspended discharge — This is an absolute discharge that does not take effect until a future date
Discharge refused —The court has the right to refuse a discharge
Once you are discharged, you will have a fresh start!
If you still have non-dischargeable debts that you need to manage, BDO can provide resources to help you with budget planning to ensure you stay on the path to financial stability.