{"id":78984,"date":"2026-02-19T12:22:32","date_gmt":"2026-02-19T17:22:32","guid":{"rendered":"https:\/\/www.rbcroyalbank.com\/en-ca\/?post_type=rbc_my_money_matter&#038;p=78984"},"modified":"2026-02-19T12:44:58","modified_gmt":"2026-02-19T17:44:58","slug":"personal-bankruptcy-in-canada-your-top-10-questions-answered","status":"publish","type":"rbc_my_money_matter","link":"https:\/\/www.rbcroyalbank.com\/en-ca\/my-money-matters\/debt-and-stress-relief\/bankruptcy\/personal-bankruptcy\/personal-bankruptcy-in-canada-your-top-10-questions-answered\/","title":{"rendered":"Personal Bankruptcy in Canada: Your Top 10 Questions Answered"},"content":{"rendered":"\n<section class=\"wp-block-rbc-section-block  pos-rel\" style=\"border-radius:0px\">\n<div class=\"wp-block-rbc-section-inner-block  section-inner\" style=\"border-radius:0x\">\n<div class=\"wp-block-rbc-rbc-block drop-shadow pos-rel top-line-blue block-wpr\">\n<div class=\"wp-block-rbc-rbc-block-inner-block block-inner\">\n<h4 class=\"wp-block-heading\" id=\"h-tldr\">TLDR<\/h4>\n\n\n\n<ul class=\"wp-block-rbc-list is-style-blue-disc\">\n<li class=\"wp-block-rbc-list-item\">\n<p>Personal bankruptcy in Canada is a legal process for individuals who are unable to repay most of their debts<\/p>\n<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-rbc-list is-style-blue-disc\">\n<li class=\"wp-block-rbc-list-item\">\n<p>The bankruptcy process involves working with a Licensed Insolvency Trustee (LIT), filing bankruptcy documents, surrendering non-exempt assets and attending credit counselling<\/p>\n<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-rbc-list is-style-blue-disc\">\n<li class=\"wp-block-rbc-list-item\">\n<p>Most unsecured debts are discharged after about nine months for a first bankruptcy<\/p>\n<\/li>\n<\/ul>\n<\/div>\n<\/div>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-personal-bankruptcy-in-canada\">What is Personal Bankruptcy in Canada<\/h2>\n\n\n\n<p>Many Canadians face significant financial challenges and are unsure how to move forward. One option you may be considering is personal bankruptcy, a legal process that allows those who cannot pay their debts to eliminate most unsecured debts under the supervision of a Licensed Insolvency Trustee (LIT). It can provide a fresh financial start but can also have long-term impact on your financial future.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-1-what-happens-if-i-declare-personal-bankruptcy\">1. What happens if I declare personal bankruptcy?<\/h3>\n\n\n\n<p>While it is important to understand the full\u00a0<a href=\"https:\/\/www.rbcroyalbank.com\/en-ca\/my-money-matters\/debt-and-stress-relief\/bankruptcy\/personal-bankruptcy\/understanding-the-bankruptcy-process\/\" data-dig-id=\"LP-78984-6843f0cd\" data-dig-category=\"LP\" data-dig-action=\"link click\" data-dig-label=\"bankruptcy process in Canada\" class=\"rbc-link-format\">bankruptcy process in Canada<\/a>, you can generally expect to:<\/p>\n\n\n\n<ul class=\"wp-block-rbc-list is-style-blue-disc\">\n<li class=\"wp-block-rbc-list-item\">\n<p><strong>Meet with a Licensed Insolvency Trustee (LIT):<\/strong> They will assess your financial situation and guide you through the bankruptcy process<\/p>\n<\/li>\n\n\n\n<li class=\"wp-block-rbc-list-item\">\n<p><strong>File bankruptcy documents:<\/strong> Your trustee will submit the required paperwork to begin the process<\/p>\n<\/li>\n\n\n\n<li class=\"wp-block-rbc-list-item\">\n<p><strong>Surrender applicable assets:<\/strong>&nbsp;Certain non-exempt assets may be sold to help repay the creditors<\/p>\n<\/li>\n\n\n\n<li class=\"wp-block-rbc-list-item\">\n<p><strong>Set up monthly payments:<\/strong> If you have surplus income, you may be required to make monthly payments<\/p>\n<\/li>\n\n\n\n<li class=\"wp-block-rbc-list-item\">\n<p><strong>Attend credit counselling sessions:<\/strong> These will help you understand budgeting and financial planning<\/p>\n<\/li>\n\n\n\n<li class=\"wp-block-rbc-list-item\">\n<p><strong>Be discharged:<\/strong> For a first bankruptcy, the process typically lasts about nine months, after which most unsecured debts are discharged.<\/p>\n<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-2-who-s-eligible-to-file-for-bankruptcy-in-canada\">2. Who\u2019s eligible to file for bankruptcy in Canada?<\/h3>\n\n\n\n<p>To file for personal bankruptcy in Canada, you must:<\/p>\n\n\n\n<ul class=\"wp-block-rbc-list is-style-blue-disc\">\n<li class=\"wp-block-rbc-list-item\">\n<p>Owe at least $1,000 in unsecured debts<\/p>\n<\/li>\n\n\n\n<li class=\"wp-block-rbc-list-item\">\n<p>Be unable to pay your debts as they become due<\/p>\n<\/li>\n\n\n\n<li class=\"wp-block-rbc-list-item\">\n<p>Work with a Licensed Insolvency Trustee to initiate the process<\/p>\n<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-3-how-long-does-personal-bankruptcy-last-in-canada\">3. How long does personal bankruptcy last in Canada?<\/h3>\n\n\n\n<ul class=\"wp-block-rbc-list is-style-blue-disc\">\n<li class=\"wp-block-rbc-list-item\">\n<p><strong>First-time bankruptcy:<\/strong> Typically lasts for nine months if you have no surplus income<\/p>\n<\/li>\n\n\n\n<li class=\"wp-block-rbc-list-item\">\n<p><strong>With surplus income:<\/strong> May extend up to 21 months<\/p>\n<\/li>\n\n\n\n<li class=\"wp-block-rbc-list-item\">\n<p><strong>Second or subsequent bankruptcy:<\/strong> Duration may be longer &nbsp;<\/p>\n<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-4-what-debts-can-be-discharged-through-personal-bankruptcy-in-canada\">4. What debts can be discharged through personal bankruptcy in Canada?<\/h3>\n\n\n\n<ul class=\"wp-block-rbc-list is-style-blue-disc\">\n<li class=\"wp-block-rbc-list-item\">\n<p>Most <strong>unsecured debts<\/strong>: Such as credit card debt, personal loans<\/p>\n<\/li>\n\n\n\n<li class=\"wp-block-rbc-list-item\">\n<p>Certain CRA <strong>tax debts<\/strong> may be discharged through the bankruptcy process.<\/p>\n<\/li>\n\n\n\n<li class=\"wp-block-rbc-list-item\">\n<p><strong>Excluded debts:<\/strong> Student loans (unless older than 7 years), child\/spousal support, fines and court-ordered payments are not dischargeable<\/p>\n<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-5-do-i-still-have-to-pay-child-spousal-support-if-i-declare-bankruptcy\">5. Do I still have to pay child\/spousal support if I declare bankruptcy?<\/h3>\n\n\n\n<p>Yes. Individuals owing child or spousal support are still responsible for making these payments, even if they declare personal bankruptcy for their other debts.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-6-what-are-the-alternatives-to-personal-bankruptcy-in-canada\">6. What are the alternatives to personal bankruptcy in Canada?<\/h3>\n\n\n\n<p>There are several alternatives to personal bankruptcy, which include:<\/p>\n\n\n\n<ul class=\"wp-block-rbc-list is-style-blue-disc\">\n<li class=\"wp-block-rbc-list-item\">\n<p><strong>Consumer proposals:<\/strong> allows you to negotiate with your creditors to pay back an agreed-upon amount of your debt over a specific period of time<\/p>\n<\/li>\n\n\n\n<li class=\"wp-block-rbc-list-item\">\n<p><strong>Debt consolidation or Informal debt settlements:<\/strong> a negotiation-based approach to managing debts outside the formal bankruptcy process<\/p>\n<\/li>\n<\/ul>\n\n\n\n<p>These alternatives may help protect assets and reduce credit impact.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-7-how-will-personal-bankruptcy-affect-my-credit-score\">7. How will personal bankruptcy affect my credit score?<\/h3>\n\n\n\n<p>Personal bankruptcy will negatively impact your credit score and typically remains on your credit report for six-to-seven years from the date your bankruptcy is discharged. However, it\u2019s possible to start&nbsp;<a href=\"https:\/\/www.rbcroyalbank.com\/en-ca\/my-money-matters\/debt-and-stress-relief\/bankruptcy\/personal-bankruptcy\/bouncing-back-rebuilding-credit-after-bankruptcy\/\" data-dig-id=\"LP-78984-92acaf7d\" data-dig-category=\"LP\" data-dig-action=\"link click\" data-dig-label=\"rebuilding your credit rating\" class=\"rbc-link-format\">rebuilding your credit rating<\/a>&nbsp;while in bankruptcy through secured credit cards or small loans.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-8-what-assets-won-t-be-seized-during-personal-bankruptcy\">8. What assets won\u2019t be seized during personal bankruptcy?<\/h3>\n\n\n\n<p>While every province has specific exemption limits, it is important to understand the limits in your home province. You can find a full list of&nbsp;<a href=\"https:\/\/bankruptcy-canada.com\/bankruptcy\/bankruptcy-exemptions-what-you-keep\/\" data-dig-id=\"LP-78984-e85ef857\" data-dig-category=\"LP\" data-dig-action=\"link click\" data-dig-label=\"bankruptcy exemptions\" class=\"rbc-link-format\">bankruptcy exemptions<\/a>&nbsp;online, but the following are typically exempt:<\/p>\n\n\n\n<ul class=\"wp-block-rbc-list is-style-blue-disc\">\n<li class=\"wp-block-rbc-list-item\">\n<p>Primary motor vehicle (up to a certain value)<\/p>\n<\/li>\n\n\n\n<li class=\"wp-block-rbc-list-item\">\n<p>Household furniture or equipment<\/p>\n<\/li>\n\n\n\n<li class=\"wp-block-rbc-list-item\">\n<p>Tools required for trade work<\/p>\n<\/li>\n\n\n\n<li class=\"wp-block-rbc-list-item\">\n<p>Personal items and necessary clothing<\/p>\n<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-9-can-i-be-denied-personal-bankruptcy-in-canada\">9. Can I be denied personal bankruptcy in Canada?<\/h3>\n\n\n\n<p>Yes. A Licensed Insolvency Trustee (LIT) may refuse to accept your application for bankruptcy if you are unable to cover the Trustee\u2019s fees or meet other eligibility requirements. If you can\u2019t find LITs to accept your bankruptcy application, the OSB\u2019s Bankruptcy Assistance Program may be able to help you.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-10-how-do-i-know-if-i-should-consider-filing-for-bankruptcy\">10. How do I know if I should consider filing for bankruptcy?<\/h3>\n\n\n\n<p>Deciding if and when to file for bankruptcy is a major financial decision that must be made carefully. You might consider bankruptcy if you:<\/p>\n\n\n\n<ul class=\"wp-block-rbc-list is-style-blue-disc\">\n<li class=\"wp-block-rbc-list-item\">\n<p>Have overwhelming unsecured debt (if your credit cards and loan debts are so high that you cannot realistically repay them)<\/p>\n<\/li>\n\n\n\n<li class=\"wp-block-rbc-list-item\">\n<p>Receive collection calls or notices from creditors<\/p>\n<\/li>\n\n\n\n<li class=\"wp-block-rbc-list-item\">\n<p>Can\u2019t make your minimum payments<\/p>\n<\/li>\n\n\n\n<li class=\"wp-block-rbc-list-item\">\n<p>Use credit to pay for necessities<\/p>\n<\/li>\n\n\n\n<li class=\"wp-block-rbc-list-item\">\n<p>Lose income due to job loss or medical issues, making repayment difficult<\/p>\n<\/li>\n\n\n\n<li class=\"wp-block-rbc-list-item\">\n<p>Have no plan to repay your debts within a realistic timeframe<\/p>\n<\/li>\n<\/ul>\n\n\n\n<p>Personal bankruptcy may feel overwhelming, and there are alternatives. However, understanding the process is an important first step to deciding if it is right for you.<\/p>\n\n\n\n<p>Check out other insights on Debt and Stress&nbsp;<a href=\"https:\/\/www.rbcroyalbank.com\/en-ca\/my-money-matters\/debt-and-stress-relief\/\" data-dig-id=\"LP-78984-2459543a\" data-dig-category=\"LP\" data-dig-action=\"link click\" data-dig-label=\"here\" class=\"rbc-link-format\">here<\/a>.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-rbc-rbc-default-collapsible\"><p><button class=\"collapse-toggle collapsed\" data-target=\"#collapse834a1009\" data-toggle=\"collapse\" aria-expanded=\"false\" aria-controls=\"collapse834a1009\" data-dig-id=\"LP-57738-834a1009\" data-dig-category=\"LP\" data-dig-action=\"accordion closed\" action-closed=\"accordion closed\" action-opened=\"accordion open\" data-dig-label=\"Things our lawyers want you to know\"><span>Things our lawyers want you to know<\/span><span>Things our lawyers want you to know<\/span><\/button><\/p><div class=\"collapse-content collapse\" id=\"collapse834a1009\">\n<div class=\"wp-block-rbc-collapsible-inner-block collapse-inner\">\n<p>This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.<\/p>\n<\/div>\n<\/div><\/div>\n<\/div>\n<\/section>\n","protected":false},"excerpt":{"rendered":"<p>Learn how personal bankruptcy works in Canada, who is eligible, and explore alternatives like consumer proposals. Get answers to the top 10 questions.<\/p>\n","protected":false},"author":80,"featured_media":78985,"parent":57280,"menu_order":0,"template":"wp-custom-template-mmm-sticky-nav","meta":{"_acf_changed":false,"advgb_blocks_editor_width":"","advgb_blocks_columns_visual_guide":"","footnotes":""},"tags":[],"rbc_content_type":[31],"rbc_audience":[110],"rbc_lob_group":[35],"rbc_difficulty_level":[33],"rbc_mmm_category":[309,302,333],"class_list":["post-78984","rbc_my_money_matter","type-rbc_my_money_matter","status-publish","has-post-thumbnail","hentry","rbc_content_type-article","rbc_audience-business-owners","rbc_lob_group-business","rbc_difficulty_level-beginner","rbc_mmm_category-bankruptcy","rbc_mmm_category-debt-stress-relief","rbc_mmm_category-personal-bankruptcy"],"acf":{"contently_publication_id":"374478","custom_author":"Diane Amato","rbc_video_header":"","rbc_media_duration":"","rbc_toc_for_mmm_tag":"h2","rbc_toc_for_mmm_limit":6,"rbc_toc_for_mmm":null,"rbc_toc_for_mmm_action":"Generate Table Of Contents"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.7 (Yoast SEO v26.8) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<meta name=\"description\" content=\"Learn how personal bankruptcy works in Canada, who is eligible, and explore alternatives like consumer proposals. 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