Debt Relief Experts
Life after bankruptcy doesn’t always go as planned. Despite your best efforts to maintain financial stability, you might find yourself struggling with debt again. If you’ve previously filed bankruptcy in Canada, you may be wondering if filing a second time is possible and what it entails.
Yes, you can file bankruptcy more than once in Canada. However, the bankruptcy process, timeline, and implications differ significantly from your first bankruptcy. Before making this decision, it’s important to understand what’s involved and explore all available options.
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Can You File Bankruptcy More Than Once?
The Bankruptcy and Insolvency Act allows you to file bankruptcy in Canada more than once. To qualify for a second or subsequent bankruptcy:
- You must be discharged from your previous bankruptcy
- There must be no conditions on your previous discharge that would prevent a new filing
- You must be able to demonstrate your current inability to repay your debts
Your Licensed Insolvency Trustee (LIT) plays a crucial role in repeat bankruptcies. They’ll assess your eligibility, review your financial situation, and ensure you understand all implications before proceeding with another personal bankruptcy filing.
How a Second Bankruptcy is Different than the First
When you file bankruptcy for a second time, there are several important differences you need to understand:
Longer Discharge Time: It will take longer to receive you bankruptcy discharge for a second bankruptcy than if this was your first time filing. A first bankruptcy typically lasts 9 to 21 months, while a second bankruptcy lasts at least 24 months (or 36 months if you have surplus income).
Higher Total Cost: Because a second bankruptcy lasts longer, you will make monthly payments for a lot longer. This means filing bankruptcy a second time will cost more than a first bankruptcy and this can become quite expensive if you have surplus income payments.
Longer Credit Report Impact: A second bankruptcy remains on your credit report for 14 years from the date of discharge, compared to 6 years for a first bankruptcy. This extended reporting period can significantly impact your ability to rebuild credit.
Additional Requirements for Third Bankruptcies
A third bankruptcy is significantly more complex than previous bankruptcies. The key difference when filing bankruptcy a third time is that there is no automatic discharge – you must attend a mandatory discharge hearing where a judge will review your case.
The court has considerable discretion and may impose specific conditions for discharge, suspend your discharge for a period of time or refuse your discharge altogether. In deciding, the bankruptcy court will evaluate several factors including your conduct during the bankruptcy, your income and payment history and the circumstances that led to your debts.
Given these serious implications, it’s highly recommended to explore alternatives before pursuing a third bankruptcy.
Filing a Consumer Proposal After Bankruptcy
Before proceeding with another bankruptcy, consider a consumer proposal. You can file a consumer proposal after bankruptcy for new debts if you have been discharged from your previous bankruptcy.
A consumer proposal is often a better alternative to filing bankruptcy twice since it:
- Has less impact on your credit report (at most six years from filing versus 14 for a second bankruptcy)
- Provides more flexible payment options and has lower monthly payments
- Once accepted, there is not risk that a creditor or the court may oppose your discharge
- Allows you to keep your assets
Your Licensed Insolvency Trustee can help you compare a consumer proposal and bankruptcy as well as look at other options including debt consolidation or a debt management plan.
Deciding if Another Bankruptcy is Your Best Option
Before making this decision, consider:
- The extended bankruptcy discharge period
- The long-term impact on your credit rating
- Whether you’ve addressed the underlying causes of your financial difficulties
- If you can manage a consumer proposal instead
Many people believe that filing bankruptcy multiple times means they’ve failed. However, sometimes circumstances beyond your control – job loss, illness, or family emergencies – can derail even the best financial plans.
The most important step is getting professional advice about your options. At Hoyes Michalos, we can review your situation and help you understand all available debt relief options. Contact us today for a free, confidential consultation to discuss whether a second bankruptcy is right for you or if another solution might work better for your situation.
