Three Things You Need to Know About Your Bankruptcy Discharge

  • By Jillian Taylor-Mancusi, B.A., C.I.R.P

 

The bankruptcy process is just that—a process. As such, your bankruptcy discharge, which occurs when your debts are officially eliminated and you are no longer responsible for them, is something that takes a little bit of time.

The amount of time it will take for your bankruptcy to be discharged will certainly affect your decision to file bankruptcy or not. Here are three things you need to know about your bankruptcy discharge:

1)   Surplus income affects your bankruptcy discharge.

The amount of time it takes for your bankruptcy to be discharged depends in part on whether or not you have surplus income. Surplus income is any excess income you have that falls above predefined guidelines that are based on your family size. If your trustee informs you that you have surplus income, you’ll be required to make extra monthly payments to your trustee. These payments are then used to repay your creditors.

If you have surplus income, your bankruptcy discharge will take longer than someone who doesn’t.

2)   Everyone’s bankruptcy is different.

It used to be that most first bankruptcies were discharged after nine months, unless there were extenuating circumstances. Now, however, that’s no longer the case.

If this is your first bankruptcy and you must make extra monthly payments, your bankruptcy will be automatically discharged after 21 months. If you don’t have to make surplus income payments, your bankruptcy will be discharged after 9 months.

3)   If you’ve already filed bankruptcy, the bankruptcy process will be longer.

People who are filing their second and even third bankruptcies can expect a progressively longer amount of time it takes for the bankruptcy to be discharged.

If you are filing bankruptcy for the second time and you don’t have to make surplus income payments, your bankruptcy will be automatically discharged after 24 months. If you do have extra income, it will be an extra year, or 36 months, before your bankruptcy is discharged.

If you’re considering filing bankruptcy for a third time, be aware that there is no automatic discharge. Instead, after a minimum of 24 months (36 if you have surplus income), your trustee must apply to the bankruptcy court, who will then hear your request for discharge. In most cases, you must meet certain conditions in order for your debts to be eliminated.

After the Bankruptcy Discharge

Once your bankruptcy is discharged, you are no longer liable for your debts. Additionally, you are no longer required to make surplus income payments. You are now officially free of your unsecured debts and can begin to rebuild your credit.

If you’re thinking about filing bankruptcy, make sure you discuss your bankruptcy discharge with a licensed trustee. Knowing how long you will be bankrupt can make a difference in whether or not bankruptcy is the right choice for you and your family.

Jillian Taylor-Mancusi, B.A., C.I.R.P

Jillian has worked in the insolvency field since 1992. She is a graduate of the University of Manitoba. She received her Insolvency Counselor’s Qualification Certificate from Ryerson Polytechnic University in 1998, and in 2007 she attained her license as a Licensed Insolvency Trustee. Jillian is a Read More Jillian has worked in the insolvency field since 1992. She is a graduate of the University of Manitoba. She received her Insolvency Counselor’s Qualification Certificate from Ryerson Polytechnic University in 1998, and in 2007 she attained her license as a Licensed Insolvency Trustee. Jillian is a member of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP). She is Past President of the Manitoba Association of Insolvency and Restructuring Professionals (MAIRP).Jillian has held positions on the Armstrong Point Association, Executive of her local EDA Riding Association, Manitoba Highland Dance Association, and the Continuing Education Committee of CAIRP. Previously, Jillian was the Treasurer for the Parent Association at her daughter’s school. Currently, Jillian serves as the Vice Chair for Dressage Winnipeg. Close

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