How long does personal bankruptcy last in Canada?

Canadians often wonder how long their personal bankruptcies will last. A federal legislation called the bankruptcy and insolvency act governs the bankruptcy process for individuals in Canada, and allows the debtor to enter bankruptcy and leave it without their debts.  During bankruptcy, the debtor has several duties and obligations: reporting their income to the trustee on a monthly basis and paying excess income if there is any, making payments for any non exempt assets, helping the trustee prepare any outstanding tax returns, and attending two counselling sessions in the office, or any meetings requested by the trustee. During the discharge process, if you have not been bankrupt before, the first question is, do you have any excess income? If you do not have any excess income, then you are eligible for discharge at the end of 9 months, as long as all of your other duties have been complied with. If you do have excess income, then you are not eligible for a discharge until 21 months. However, if you have been bankrupt before, and do not have excess income, they you are not eligible for a bankruptcy for 24 months. If you have been bankrupt before, and do have excess income, then you are not eligible for a discharge for 36 months. There are also certain tax rules for debtors who owe more than $200,000 to Canada Revenue Agency, which can be discussed with a trustee. Once you come to the end of a process, and exit bankruptcy, there are still some debts that are non dis-chargeable. These debts include child support and alimony debts, fraud or fines of the court, or student loan debts that are less than 7 years old. This is a simplified overview of the Canadian personal bankruptcy system, so your individual experience may vary. For more information regarding your personal situation, please call us for a free consultation.

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