Successfully discharging your debts | Raymond Chabot (2024)

Summary

What is a discharge from debts?

• A discharge from debts is the conclusion of a bankruptcy or consumer proposal. To get there, you need to complete all the steps and respected all the commitments agreed to.
• If it’s your first bankruptcy, you have to wait 9 or 21 months (depending on your income) before your debts are discharged. It can take up to 5 years with a consumer proposal. Barring certain exceptions, the discharge from debts happens automatically. Your Licensed Insolvency Trustee will sign and give you a certificate to show that your debs have been discharged. Even though rebuilding your credit gets easier after your debts are discharged, you can start taking steps during the process. Yes, there is life after money problems!

Here’s the definition

Your debts are discharged after a bankruptcy or a consumer proposal. It’s the last step in either process. This means all the debts you had when you declared bankruptcy or filled a consumer proposal are wiped out, now that you’ve properly completed all of the steps of the process. No more debts and or payments to creditors.

How do you have your debts discharged?

It’s simple. Complete all the steps in the bankruptcy or consumer proposal process and follow through on the commitments you made with the Licensed Insolvency Trustee.

Once that’s done, your Licensed Insolvency Trustee gives you a certificate to show you’re now free of all the debts included in the bankruptcy or consumer proposal.

But be aware of certain conditions:

• Your creditors, the Trustee and the Superintendent must agree the discharge.
• You must have attended the two mandatory meetings.
• You can’t have declared bankruptcy more than once already.
• You can’t have more than $200,000 tax debt.

How long does a bankruptcy or consumer proposal last?

A consumer proposal lasts a maximum of 5 years. It depends on the repayment agreement with your creditors.

In the case of a first bankruptcy, your discharge from debt happens automatically after 9 months, unless you have surplus income. If so, the discharge happens after 21 months.

For a second bankruptcy, the process can take longer.

Is it possible that my debts won’t be discharged automatic?

As long as you have meet all the conditions laid out in your bankruptcy procedure or your consumer proposal (see above), you will be automatically discharged from debt on the prescribed date.

But if you have broken one or more of your commitments, new conditions could be imposed or the period increased before you are discharged from your debts.

Once I’ve received my discharge from debts, what happens?

Your debts are cleared! It’s a new start. You have a chance to get your finances in order. You’ll need to develop good financial habits, like paying your bills on time. With time and effort, your credit rating will climb and you’ll earn a reputation as a good payer. Little by little, you’ll be able to borrow money again and be offered better rates on loans for new projects (car, house, vacation, etc.).

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