In Canada, a first-time bankruptcy typically lasts for 9 months. However, the length can vary depending on your financial situation and whether you are required to make surplus income contribution payments (in which case the bankruptcy discharge cannot be before the end of the 21st month).
For individuals filing for bankruptcy a second time, the process can take 24 to 36 months, depending again on surplus income. Your Licensed Insolvency Trustee will help you understand how long your bankruptcy will last based on your earnings, household size, and applicable thresholds.
For the unfortunate folk who are filing bankruptcy for a third time please speak with your LIT about the discharge. Generally, it cannot be earlier than above and will always require a court hearing to get the discharge certificate.
Surplus income contribution requirement payments
Surplus income contribution requirement payments occur when your average income exceeds the government-set threshold for your household size (and various other factors). The more your income goes above this limit, the more you may have to pay.
Generally, you are required to contribute your proportion of half of the amount by which the household income exceeds the government set standard for 21 months (longer payment terms can be arranged).
These payments ensure that individuals with higher earnings contribute more toward repaying their debts during bankruptcy. Your trustee calculates these payments and adjusts them (up or down) based on changes in your income – which is a reason why you need to send monthly income reports to the LIT.