How to File Personal Bankruptcy in Canada

This is an overview of the personal bankruptcy process in Canada.

The bankruptcy process is governed by a federal statue called the Bankruptcy and Insolvency Act (“BIA”). Under the BIA, the major steps in the bankruptcy process are explained below.


  1. Image titled File Personal Bankruptcy in Canada Step 1
    Contact a federally licensed trustee in bankruptcy for a review and assessment of the financial circumstances. Most trustees will provide a free consultation.
  2. Image titled File Personal Bankruptcy in Canada Step 2
    File an assignment in bankruptcy. This is a document prepared by the trustee which indicates that you are voluntarily "assigning" your assets to the trustee for distribution to your creditors. The trustee shall file the assignment (and other related documents) with the Office of the Superintendent of Bankruptcy, a division of the federal government. Once filed, a stay of proceedings is in effect and most of your creditors shall be unable to initiate or continue legal proceedings against you.
  3. Image titled File Personal Bankruptcy in Canada Step 3
    Attend credit counselling sessions with the trustee. During your bankruptcy you’ll be required to meet with the trustee to discuss any potential non-financial issues that led to your filing for bankruptcy. For example, gambling, substance abuse, and marital breakdown are common problems in society that inevitably lead to financial hardship. In addition, the trustee will provide information to you on money management and ways in which you can rebuild your credit.
  4. Image titled File Personal Bankruptcy in Canada Step 4
    Pay your surplus income obligations in full before you are discharged from bankruptcy (if you are a first-time bankrupt, this is generally 9 months after the day of bankruptcy). The federal government sets net monthly income thresholds for a person to maintain a reasonable living standard in Canada. For every dollar that a debtor receives above that threshold, he is required to pay at least 50% to the trustee for the benefit of the creditors. A bankrupt is required to submit monthly income and expense statements to the trustee to determine if the bankrupt is required to pay surplus income.


  • An example of a surplus income calculation - The bankrupt has a monthly net pay is $3,000. The 2010 federal threshold for a reasonable living standard for a family of one is $1,884. The bankrupt would be required to pay $558 (($3,000 - $1,884) x 50%) each month during the time he is bankrupt.
  • When filing bankruptcy, the general rule of thumb is that your assets vest in the trustee and become his (or her) property. The trustee is then required to liquidate the assets and distribute the funds to your creditors. However, certain assets may be exempt from seizure by the trustee depending on the province where you reside. A trustee shall be able to advise you which of your assets you'll be allowed to keep.


  • This article is an overview of the bankruptcy process in Canada rather than a complete analysis. Before applying any of these suggestions, consult your professional advisor.

Things You'll Need

  • Prior to meeting with a trustee for a review of your circumstances, you should bring the following with you:
  • List of creditors, with account balances, account numbers and mailing addresses
  • A recent pay stub or proof of income
  • Identification to verify your full legal name
  • If you have financial assets (e.g., stocks, bonds, mutual funds, RRSPs, life insurance policies, etc), the most recent statements
  • If you own a vehicle, the ownership and insurance certificate
  • Your last income tax assessment from Canada Revenue Agency
  • If you own a home, a recent opinion of value from third party (e.g., real estate agent or professional real estate appraiser) and a statement of your current mortgage balance

Article Info

Categories: Bankruptcy