A personal bankruptcy ends with a discharge that releases most of the debts you had when you filed. This page covers what happens between filing and discharge, what the discharge does and doesn’t clear, and how people rebuild afterwards. It’s part of the debt strategies hub; for deciding whether to file, or whether a consumer proposal fits better, see consumer proposal vs bankruptcy.
From filing to discharge
Bankruptcy is filed through a Licensed Insolvency Trustee. During it you attend 2 financial counselling sessions, report your income and expenses to the trustee, and make any surplus income payments. A first or second bankruptcy ends in an automatic discharge if those duties are done and no one (the trustee, a creditor or the Office of the Superintendent of Bankruptcy) opposes it:
| Bankruptcy | No surplus income | With surplus income |
|---|---|---|
| First | 9 months | 21 months |
| Second | 24 months | 36 months |
A third or later bankruptcy has no automatic discharge; a court decides.
Surplus income
Surplus income is net household income above a standard set each year by the Superintendent of Bankruptcy. For 2026, the standard for one person is $2,716 a month, with higher amounts for larger families. You pay 50% of the monthly surplus to the estate, and nothing if the surplus is under $200 a month (Directive No. 11R2-2026).
What the discharge clears
A discharge releases you from debts that existed on the day you filed, with these exceptions (Office of the Superintendent of Bankruptcy):
- support payments to a former spouse or children;
- fines and penalties imposed by a court;
- debts arising from fraud;
- student loans, if fewer than 7 years have passed since you stopped being a full- or part-time student.
Secured debts are tied to property: to keep a house or car, you keep paying the mortgage or loan.
What happens to your savings and refunds
Under the Bankruptcy and Insolvency Act, RRSPs, RRIFs and RDSPs are exempt from the bankruptcy, except for contributions made in the 12 months before it. TFSAs aren’t included in that exemption. Any income tax refund for the year you file belongs to the bankruptcy estate. Other exempt property, such as household goods and a vehicle up to set values, depends on provincial law; your trustee can tell you what applies.
Your credit report
The Office of the Superintendent of Bankruptcy says information about a first bankruptcy stays on your credit file for 6 to 7 years after discharge, and longer for a second. After discharge, check your Equifax and TransUnion reports to confirm the debts included in the bankruptcy show as discharged rather than still owing, and dispute any that don’t.
Rebuilding after discharge
Credit scores recover as new, positive payment history builds up. People commonly start with a secured credit card, which is backed by a deposit, and pay it in full each month; rebuilding credit after bankruptcy covers the steps and timelines. Alongside that:
- A budget: the counselling sessions during bankruptcy cover budgeting, and budgeting 101 is a place to continue.
- A cash cushion: even a small emergency fund reduces the need to borrow when something goes wrong.
- Taxes: keep filing on time; benefits such as the Canada Groceries and Essentials Benefit (formerly the GST/HST credit) depend on it.
- Offers to “repair” credit: credit repair companies can’t remove accurate information from your report, and disputing errors with the bureaus is free.
Related resources
Sources
The figures and rules on this page come from these sources, last checked against them on September 25, 2026. How we check facts.
- Government of Canada: You Owe Money—Bankruptcy Discharge and its Consequences for the Bankrupt
- Government of Canada: Directive No. 11R2-2026 Surplus Income
- Justice Laws (Canada): Section 67