How long debt relief takes depends on which route you take, because each one runs on a different clock. A consumer proposal can last up to five years. A first bankruptcy usually ends in 9 months, or in 21 months if you have to make surplus income payments. A debt management plan through a credit counsellor runs 1 to 5 years. A private debt settlement has no set length at all, because nothing in law makes your creditors take part.
Those figures come from the federal regulator, the Office of the Superintendent of Bankruptcy, and the Financial Consumer Agency of Canada covers debt settlement. They describe the route itself. They do not count the weeks before you start, or the years your credit report remembers it after you finish. Both of those matter as much as the headline number, so this guide covers all three.
The clock on each route
| Route | How long it runs | Who sets the length |
|---|---|---|
| Debt management plan | 1 to 5 years | The plan agreed with the creditors who accept it |
| Consumer proposal | Up to 5 years | Federal law caps it; the offer sets the actual term |
| First bankruptcy, no surplus income | 9 months | Federal law, unless someone opposes the discharge |
| First bankruptcy, with surplus income | 21 months | Federal law, unless someone opposes the discharge |
| Second bankruptcy | 24 or 36 months | Federal law, depending on surplus income |
| Third or later bankruptcy | No automatic end | The court |
| Private debt settlement | No set length | Whether and when each creditor agrees |
Two of these routes are formal processes under the Bankruptcy and Insolvency Act: the consumer proposal and bankruptcy. A Licensed Insolvency Trustee is the only one who can administer them. The Financial Consumer Agency of Canada says so directly: “Only a Licensed Insolvency Trustee (LIT) may offer you these 2 options.” Federal law also sets their timelines, so the length is not left to a contract.
What happens fast
People often assume every debt route is slow from the first day. The formal routes are not. Some of their most important effects are immediate.
The day a proposal or bankruptcy is filed
Filing a consumer proposal or entering bankruptcy puts a legal stop on collection action by most unsecured creditors, lawsuits and wage garnishments included. Among the exceptions are secured creditors, such as a mortgage or car lender, and the enforcement of family support. With a proposal, you also stop paying your unsecured creditors directly, and your payments go through the trustee instead.
A debt management plan is different. Your credit counsellor can ask creditors to stop collection, but no law makes them stop. A creditor who said no is not bound by the plan at all.
The first 45 days of a consumer proposal
Once a proposal is filed, creditors have 45 days to accept it or reject it. Creditors holding at least a quarter of the proven claims can require a meeting of creditors to vote on it. If no meeting is called within those 45 days, the proposal is deemed accepted, whatever objections came in. After acceptance, there is a further 15 days in which the regulator or another interested party can ask for a court review. If nobody asks, the proposal is deemed approved by the court.
So the uncertain part of a proposal, whether it will be accepted, is usually settled in the first two months. The remaining years are payments on terms you already know.
What stretches the clock
The table gives the standard lengths. Several things push a file past them.
Surplus income in a bankruptcy
In a bankruptcy, the trustee calculates your surplus income from a formula the regulator sets, based on your income and your household. If that surplus income is $200 a month or more, a first bankruptcy runs 21 months instead of 9, and you make payments from that income for the whole period.
A second or later bankruptcy
A second bankruptcy runs 24 months with no surplus income, or 36 months with it. From the third bankruptcy on, there is no automatic discharge at all. The court decides the terms.
An opposed discharge
Every automatic discharge in the table carries conditions. Nobody opposes it, and you attend the two required financial counselling sessions. One more exception matters to anyone with tax debt: if your personal income tax debt is $200,000 or more and makes up 75% or more of your unsecured debt, there is no automatic discharge, and a court hearing decides it. A creditor, the trustee or the regulator can oppose a discharge, for example when the person in bankruptcy has not met their duties. The court then hears the application, and the result can be a conditional discharge that requires more payments over a further period.
Missed payments in a consumer proposal
A proposal is deemed annulled if you make monthly payments and fall behind by the equivalent of three of them. If your payments are less frequent, it is annulled when the last one is more than three months past due. A court can annul it for other defaults too. Once it is annulled, your creditors can take action to collect again, unless the proposal is revived. An annulled proposal does not shorten anything. It puts you back near the start.
Creditors who will not take part
A debt management plan only covers the creditors who accept it, and missing payments can get the whole plan cancelled. A debt settlement company has no legal power over your creditors at all. The FCAC notes that creditors “don’t have to work with a debt settlement company”. When creditors can simply decline, there is no end date anyone can promise you.
The clock after the route ends
Finishing the route is not the same as your credit history moving on. The regulator reports every proposal and bankruptcy filing to Equifax and TransUnion, and it also reports a bankruptcy discharge. Each route then stays on your credit report for its own period.
- Debt management plan: noted on file for 2 years once you finish it.
- Consumer proposal: Equifax removes it 3 years after you finish it or 6 years after it was filed, and TransUnion 3 years after you finish it or 6 years after the date you defaulted on the account, whichever comes first.
- First bankruptcy: stays 6 years past your discharge date with Equifax, and 7 years with TransUnion in Ontario.
- Second or later bankruptcy: 14 years past discharge.
When you complete a consumer proposal you receive a certificate of full performance. The regulator’s consumer proposal guide tells you to send a copy to the credit reporting agencies so your record is updated. It is a small step, and it is yours to take.
This is why the fastest route is not always the shortest in practice. A route that ends sooner can leave a longer mark. A route that runs longer can leave a lighter one. The right comparison puts both numbers side by side.
The time before any clock starts
None of the clocks above starts until you have chosen a route, and choosing well takes information you may not have gathered yet. Every formal route begins with a complete list of what you own and what you owe. In a bankruptcy you also have to tell the trustee about property you sold or transferred in the past few years. Collecting that is the part of the timeline you control.
If you are in Vaughan, Toronto or anywhere in Ontario, our debt relief page covers proposals, bankruptcy and the options in between. If the debt is owed to the CRA, our page on how to protect assets from creditors in Ontario covers personal tax, HST, source deductions and director’s liability.
It is also the part where the rest gets decided. Whether surplus income applies decides whether a first bankruptcy runs 9 months or 21. Which assets are exempt varies from province to province, so the Ontario rules apply here. Equity in a home and a spouse’s interest in it change which route fits at all. Those are answers to have before a clock starts, not halfway through it.
How Get Total Debt Relief helps
Get Total Debt Relief is not a Licensed Insolvency Trustee, so we do not file proposals or bankruptcies. What we can do is help you resolve the open questions before a clock starts. The free consultation reviews your debts, your assets, your exemptions, your home equity and any spousal interest. After that, the next step is yours.
You can book a debt relief consultation or call 647-276-8844.
Quick answers about how long debt relief takes
How long does a consumer proposal take?
Up to five years. That is the legal maximum, and the offer itself sets the actual term. Creditors have 45 days after filing to accept or reject it. If they accept, you then make the agreed payments to the trustee until the term ends.
How long until collection calls and garnishments stop?
Filing a consumer proposal or entering bankruptcy stops collection action by most unsecured creditors, lawsuits and wage garnishments included. Secured creditors and family support enforcement are not covered. With a debt management plan, your credit counsellor can ask creditors to stop, but no law makes them. A debt settlement company cannot legally stop any creditor.
How long does bankruptcy last in Ontario?
A first bankruptcy ends in 9 months with no surplus income payments, or 21 months with them, as long as nobody opposes the discharge and no court hearing is required. A second bankruptcy takes 24 or 36 months. A third or later bankruptcy has no automatic discharge, and the court sets the terms.
How long does debt relief stay on my credit report?
It depends on the route. A debt management plan stays noted for 2 years once you finish it. Equifax and TransUnion both remove a consumer proposal 3 years after completion, or after 6 years (Equifax counts from filing, TransUnion from the date you defaulted on the account), whichever is sooner. A first bankruptcy stays on file 6 years past your discharge date with Equifax, and 7 years with TransUnion in Ontario.
Does a free consultation commit me to a route?
No. The consultation is there so you understand all your choices before you make one. You decide afterwards how you want to proceed, and whether you want to proceed at all.
Where we fit
Get Total Debt Relief is a debt consulting and representation firm, not a Licensed Insolvency Trustee. Only a Licensed Insolvency Trustee can file your documents for a consumer proposal or a bankruptcy with the Superintendent of Bankruptcy. However, he is not the only one you should get your information from. Unlike a Trustee, we look to preserve your equities and assets, not liquidate them. What we do is make sure you only pay what you have to pay, not what someone thinks you can pay. We use every tool available to make sure you protect your home, your business and other equities as well as Spousal rights. Once you’re ready to move forward with whichever process you choose, that’s when it’s time to move on to the selection of a Trustee. Please keep in mind that if for any reason, you have to deal with a legal matter during your Bankruptcy or Proposal, a Trustee can NEVER legally represent you. However, he CAN act against you. Choose your representation wisely!
DISCLOSURE:
Get Total Debt Relief is a debt consulting and representation firm. We are not a Licensed Insolvency Trustee, and we are not connected to the Canada Revenue Agency or any government body.
Only a Licensed Insolvency Trustee can file your documents for a consumer proposal or a bankruptcy with the Superintendent of Bankruptcy.
OUR SERVICE:
However, any Trustee you choose can’t legally represent you over your Creditors nor can he give you any advice that will benefit you over your Creditors. The Trustee’s job is to maximize how much he can get from you and your estate for the benefit of your Creditors and the more he collects in a Proposal, the more he makes.
What we do is the work before the filing and the path you choose will come from the advice and information that goes with it. More importantly, we use tools that are not available to the Trustee because of who’s interests he represents. We go through your whole situation with you. We answer your questions, for as long as it takes and as many times as you need to ask them. Every consultation is free and if or when you decide to move forward, you’ll know which option best suits you, your family and or your business. And, unlike the Trustee, we will NEVER use the information you’ve given us against you in Court. The bottom line is that we don’t look to liquidate your assets and equities, we look to protect them.