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Personal Bankruptcy

Bankruptcy Process Length: How Long Does It Last?

Thinking of filing for bankruptcy and wondering how long the bankruptcy process length is? We have the answer.

When you file for bankruptcy, you remain bankrupt until you are discharged. When discharged from bankruptcy your bankruptcy is over. We will provide you with a very important legal document confirming your discharge. With a few possible exceptions, your bankruptcy debts will have been extinguished, and your duties and responsibilities as a bankrupt will have ended. However, the complete answer to the question, “How long does bankruptcy last?” is not a simple yes-or-no answer. It is more complex than that. Don’t worry, we will help you better understand the length of time.

The duration of your bankruptcy will depend on:

  • How many times you have filed for bankruptcy
  • Your income during the bankruptcy
  • Completion of required payments to us
  • Completion of your duties, such as attending required budgeting sessions, providing us with income tax documents, etc.

If you are a first-time bankrupt, without surplus income (discussed below), you must be bankrupt at least nine months. A first-time bankrupt with surplus income must be bankrupt at least 21 months, and make required monthly payments to us, as your Licensed Insolvency Trustee, for the 21 months.

If you are a second-time bankrupt, without surplus income, you must be bankrupt at least 24 months. A second-time bankrupt with surplus income must be bankrupt at least 36 months and make required monthly payments to us for the 36 months.

Third or fourth-time bankrupts are not eligible for discharge after 9, 21, 24 or 36 months. The bankruptcy court will determine the length of time you will be bankrupt and the sum you will have to pay to us, as your Licensed Insolvency Trustee.

What is surplus income? The actual calculations can be quite involved but, in summary, it is the excess of a bankrupt’s monthly household net income over a federal government prescribed cost-of-living standard. The cost-of-living standard varies depending on the number of members in the bankrupt’s household. If a bankrupt has surplus income of $200 or more a month, half of it must be paid to us. The other half is retained by the bankrupt along with the applicable cost-of-living amount. A first-time bankrupt with a surplus income payment obligation must make the required payment to us for 21 months. A second-time bankrupt with a surplus income payment obligation must make the required payment to us for 36 months.

In order to be discharged, you will also be expected to complete your statutory duties, which include payment of surplus income; payment to us of equity in assets you have chosen to retain; providing us with proof of monthly household income; providing us with income tax and HST documentation; and attending two required budgeting and credit counselling sessions.

The only way to fully understand  the question, “How long does bankruptcy last?” is to have a no-charge consultation with a member of our team. Once we have reviewed your circumstances we will be able to fully explain to you what your duties will be, how much the bankruptcy will cost, what your likely monthly payment will be, and how long your bankruptcy should last.

For a free initial consultation with one of our firm’s experienced professionals, and to explore the option best suited for you, please contact us today!

 


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