How Long Does Bankruptcy Last? The Short Answer
A first bankruptcy in Canada lasts 9 to 21 months, and it stays on your credit report for 6 years after discharge. If you have no surplus income, a first bankruptcy usually ends after 9 months. If you do have surplus income, it extends to 21 months. A second bankruptcy lasts 24 months with no surplus income, or up to 36 months with surplus income.
What is bankruptcy? Bankruptcy is a legal process under the federal Bankruptcy and Insolvency Act (BIA), administered by a Licensed Insolvency Trustee. It eliminates most unsecured debts in exchange for surrendering non-exempt assets and making any required surplus income payments.
Discharge is the date the bankruptcy ends and your eligible debts are wiped out. It doesn't erase the record, though. Equifax Canada and TransUnion Canada generally show a first bankruptcy for 6 years after discharge, so the total credit impact is often about 7 to 8 years from the day you file. TransUnion explains how bankruptcy reporting works and why timelines differ between filings.
The main alternative is a consumer proposal. It lasts up to 5 years and is removed from credit reports 3 years after completion. If you're new to the idea, our guide on what is a consumer proposal covers the basics.
Bankruptcy Timelines and Credit Report Impact in Canada
The table below compares how long each option lasts and how long it appears on your credit report.
| Option | Length | Credit report |
|---|---|---|
| First bankruptcy, no surplus income | 9 months | 6 years after discharge |
| First bankruptcy, surplus income | 21 months | 6 years after discharge |
| Second bankruptcy, no surplus income | 24 months | 14 years after discharge |
| Second bankruptcy, surplus income | 36 months | 14 years after discharge |
| Consumer proposal | Up to 5 years | Removed 3 years after completion |
A second bankruptcy in Canada lasts 24 to 36 months and stays on your credit report for 14 years after discharge, as reported by Equifax Canada and TransUnion Canada. Reporting varies by province, and Quebec's rules differ. Check with a Licensed Insolvency Trustee and verify against current Equifax Canada and TransUnion Canada policies.
What surplus income means
Surplus income rules decide whether you're in the shorter or longer bracket. If your income exceeds the Office of the Superintendent of Bankruptcy (OSB) thresholds for your household size, you make extra monthly payments to your trustee. That's what extends a first bankruptcy from 9 to 21 months.
Chapter 7 vs Canadian bankruptcy
"Chapter 7" is a US term for liquidation bankruptcy. Canada has no chapters, and the closest equivalent is a bankruptcy filed under the BIA. US Chapter 7 can stay on a credit report for 10 years, according to Chase's overview of bankruptcy on a credit report. Canadian reporting is shorter for a first filing.
Bankruptcy vs consumer proposal
Bankruptcy is shorter in duration but has a longer credit footprint. A proposal takes longer to complete, but you keep your assets and the reporting period is shorter. For the full credit picture, read how a bankruptcy or a consumer proposal affects your credit rating and our breakdown of consumer proposals and credit rating. If you'd like to avoid filing altogether, see how to avoid bankruptcy by filing a consumer proposal.
Debts that survive bankruptcy
Some debts stay with you after discharge:
- Child and spousal support
- Court fines and penalties
- Fraud-related debts
- Student loans, if you ceased being a student less than 7 years ago
Business owners and sole proprietors
Duration and asset considerations can differ if you run a business. Our article on what every small business owner should know about bankruptcy in Canada explains the variations.
Life after discharge
Credit rebuilding starts at discharge. Open a secured credit card, pay on time every month and keep your utilization low. Many people see meaningful score improvement within 12 to 24 months. Our guide on rebuilding credit and why it's important walks through the steps, and the answer on how to rebuild credit faster offers practical tips. At 4 Pillars, we support clients with credit rebuilding and financial education. Our second-insolvency rate is under 2%, compared with an industry average of 24%.
Bankruptcy Duration FAQ
How long do bankruptcies stay on your credit report in Canada?
A first bankruptcy is generally reported by Equifax Canada and TransUnion Canada for 6 years after discharge. A second bankruptcy is generally reported for 14 years after discharge. Reporting can vary by province, including Quebec. TransUnion's guide gives more detail on how the clock works.
How long does Chapter 7 bankruptcy stay on your credit?
Chapter 7 is a US term. In the US it stays on a credit report for up to 10 years. In Canada, the closest equivalent is a bankruptcy under the BIA, which is generally reported for 6 years after discharge for a first bankruptcy and 14 years for repeat bankruptcies.
What two debts cannot be erased?
Child and spousal support and court fines cannot be erased by bankruptcy in Canada. Fraud-related debts and student loans where you ceased being a student less than 7 years ago also survive.
Do they freeze your bank account when you file Chapter 7?
Chapter 7 is a US process. In a Canadian bankruptcy, filing stops creditors from seizing or garnishing your funds, and your trustee doesn't freeze every account. However, a bank you owe money to may close your account or offset your balance, so it's wise to open an account elsewhere before filing.
Can you get a 700 credit score after Chapter 7?
Yes, but it's gradual. Many people see steady gains within 12 to 24 months of discharge with a secured card, on-time payments and low utilization. Reaching 700 often takes a few years, depending on your starting point and habits.
Is a consumer proposal shorter than bankruptcy for credit purposes?
A proposal lasts up to 5 years, but it's removed from your credit report 3 years after completion. That's usually a shorter reporting period than a bankruptcy, and you keep your assets. For a side-by-side look, see bankruptcy vs consumer proposal and how they affect credit and consumer proposal vs bankruptcy.
Can I use credit while in bankruptcy?
Access is very limited. You must disclose your bankruptcy when applying for credit above a small threshold, and most mainstream lenders will decline. Secured options are more realistic. Our answer on using credit while going through restructuring covers what to expect.
Where should I go from here?
Bankruptcy can be the right fresh start, but it has long-term consequences, so it helps to weigh why some people avoid bankruptcy before you decide. If you've chosen to file, our guide on how to file bankruptcy in Canada explains the process step by step.
A Licensed Insolvency Trustee can confirm your timeline and options in a free consultation. 4 Pillars offers one at any of its 51 offices across Canada, and we're proud of our 3,000+ verified TrustPilot reviews averaging 4.9/5.
