Bankruptcy discharge in Canada: 9, 21, 24 or 36 months and what can delay it
When a personal bankruptcy ends in Canada under BIA s. 168.1, how surplus income and a second bankruptcy extend it, and what happens if a creditor or the trustee opposes discharge.
A first-time bankrupt in Canada is automatically discharged 9 months after the date of bankruptcy if no surplus income payments are required and nobody opposes the discharge, or 21 months if surplus income payments are required. A second-time bankrupt is discharged after 24 months, or 36 months with surplus income. These periods are set by section 168.1 of the Bankruptcy and Insolvency Act. Automatic discharge also depends on completing the two mandatory counselling sessions, and it is lost if the trustee, a creditor or the Superintendent files an opposition, in which case a court decides.
Part of the consumer proposal vs bankruptcy overview. General information, not legal advice.
The four timelines
| Situation | No surplus income | Surplus income required |
|---|---|---|
| First bankruptcy | 9 months | 21 months |
| Second bankruptcy | 24 months | 36 months |
| Third or later bankruptcy | No automatic discharge: a court hearing is required | Same |
Surplus income is determined under OSB Directive No. 11R2-2026: monthly income above the Superintendent's standard for your household size; you pay 50% of it if it reaches $200 a month. See surplus income standards for 2026.
Illustrative example. Maya files for a first bankruptcy in February 2026 with a monthly net income below the one-person standard of $2,716. She attends both counselling sessions and files her monthly reports. With no opposition she is discharged 9 months later, in November 2026. If a raise in April had pushed her available income to $3,100, her surplus would be $384, she would pay $192 a month from then on, and her discharge date would move to 21 months after filing.
Conditions for automatic discharge
To be discharged automatically, you must:
- Attend two counselling sessions with the trustee or a qualified counsellor (BIA s. 157.1). If you refuse or neglect them, you lose the right to automatic discharge.
- Make any surplus income payments required, or have a plan to pay arrears.
- Report monthly income and expenses to the trustee.
- Disclose all property and creditors and hand over non-exempt assets.
- Cooperate with the trustee, including attending a meeting of creditors or an examination by the Official Receiver if one is held.
- File tax returns as required; the trustee files the pre-bankruptcy and year-of-bankruptcy returns.
Before the discharge date, the trustee sends a report to the Superintendent, the bankrupt and creditors who proved claims, with a recommendation. If no one opposes, the discharge takes effect automatically and the trustee issues a certificate.
When discharge is opposed
An opposition can be filed by the trustee, a creditor, or the Superintendent of Bankruptcy. Typical grounds include:
- failure to pay required surplus income;
- hiding or transferring assets before filing;
- incurring debts without a reasonable expectation of being able to pay them;
- a large personal income tax debt (BIA s. 172.1 sets special rules if personal income tax is $200,000 or more and at least 75% of unsecured claims);
- gambling or extravagant spending before filing;
- failure to cooperate.
A court (in most provinces the superior court of the province, sitting in bankruptcy, often before a registrar) then hears the matter. It can:
| Court order | Effect |
|---|---|
| Absolute discharge | You are discharged immediately |
| Conditional discharge | Discharged only after meeting conditions, such as paying an extra sum into the estate |
| Suspended discharge | Discharge delayed to a later date |
| Refusal | No discharge; you remain bankrupt |
Illustrative example. Owen's trustee opposes his discharge because he did not pay $3,400 of required surplus income. The court grants a conditional discharge requiring payment of $3,400 at $150 a month. When the last payment is made, Owen is discharged. The figures are hypothetical.
What discharge does and does not release
Discharge releases you from most debts that existed on the date of bankruptcy. It does not release the debts listed in s. 178(1): court fines and restitution orders, support payments, debts from fraud or false pretences, and student loans if you filed while still a student or within seven years of ceasing to be one. See debts that survive bankruptcy.
Discharge also does not release a co-signer or guarantor, and it does not remove a mortgage or car loan security from the property. If you keep the car, you keep paying the loan.
After discharge
- Ask the trustee for your certificate of discharge and keep it; lenders and landlords may ask for proof.
- Check your Equifax and TransUnion reports a few months after discharge; the included debts should show as discharged in bankruptcy with a zero balance. See credit reports after bankruptcy.
- The trustee still finishes administering the estate: selling any remaining assets, paying dividends and applying for its own discharge. That can happen months after yours.
- Tax refunds for the year of bankruptcy belong to the estate even if they arrive after your discharge.
A second bankruptcy
A second bankruptcy is possible but more expensive in time and credit: 24 or 36 months to discharge, and the FCAC says credit bureaus keep the record for 14 years if you have been bankrupt more than once. A consumer proposal is often considered first. See consumer proposal rules.
When to get legal advice
If your discharge is opposed, you will be in a court process. Many people attend with only the trustee's guidance, but if a creditor alleges fraud or asks for a large condition, talk to a lawyer who practises insolvency law in your province.
Frequently asked questions
Can I apply for discharge earlier than 9 months?
A bankrupt can apply to court for discharge instead of waiting for the automatic date, but this ends automatic discharge and is rarely faster or cheaper. Ask your trustee before doing so.
Does a new job during bankruptcy change the date?
It can. If your income rises above the standard and you have to pay surplus income, a first bankruptcy can move from 9 to 21 months. Tell your trustee about income changes promptly.
Is my discharge automatic if I miss one counselling session?
No. Both sessions are a condition of automatic discharge. If you missed one, contact the trustee immediately to reschedule before the discharge date.
What if I never get discharged?
You remain an undischarged bankrupt, which limits new credit and means property you acquire can go to the estate. You can apply to court for a discharge later.
Sources
- Justice Laws Website — BIA ss. 157.1, 168.1, 172, 172.1, 173 and 178
- Office of the Superintendent of Bankruptcy — bankruptcy process, discharge and Directive 11R2-2026
- Financial Consumer Agency of Canada — bankruptcy and your credit report
