2026-06-05
What is surplus income, and how does surplus income affect me during a Bankruptcy?
Do you understand the role surplus income plays during a Bankruptcy? Learn more about what surplus income is and how it can impact the Bankruptcy process.
What Happens After Bankruptcy?
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Once you legally file for bankruptcy, your creditors should no longer phone you or sue you and any existing garnishees are lifted. An appointed Licensed Insolvency Trustee will distribute money to your creditors from your non-exempt assets and surplus income. The bankruptcy process typically lasts between 9 and 21 months.
How Do I File for Bankruptcy?
The first step is to meet with an MNP LTD Licensed Insolvency Trustee. Together, you will review all available options, including bankruptcy alternatives like consumer proposals, debt consolidation and credit counselling. If, after going through your options, you decide that bankruptcy is the right debt relief solution for your situation, your Licensed Insolvency Trustee will guide you through the process in detail.
The Bankruptcy Process at a Glance
Your Licensed Insolvency Trustee will help you to prepare and file all required paperwork. As soon as all documents are filed, harassing collection calls from creditors and wage garnishments will stop. During the bankruptcy process, you will be required to perform the following duties:
File monthly income and expense reports with your Licensed Insolvency Trustee to keep your budget in check and monitor any surplus income.
Attend two counselling sessions, during which you will examine the causes of your financial difficulties and work on debt-management strategies including budgeting, expense tracking and restoring your credit rating.
Provide your Licensed Insolvency Trustee with all necessary tax information to prepare and file your tax returns for the year in which you file bankruptcy (and previous years, if required).
Pay your Licensed Insolvency Trustee any necessary amounts, such as required surplus income payments, costs to repurchase any non-exempt assets, or administration fees.
Receive your bankruptcy discharge: If you have completed all necessary steps and duties, you will automatically be discharged from your remaining debts at the 9- or 21-month mark (with minor exceptions). Some remaining steps may be required, as set out in your court order.
Rebuild your credit rating: During your mandatory counselling sessions, you will work with your Licensed Insolvency Trustee to develop strategies for restoring your credit rating both during the bankruptcy period and in the long term.
How Long After Bankruptcy Can I Get a Loan?
Some lenders may allow you get a loan immediately after you have been discharged from bankruptcy, although you will likely be subject to higher interest rates and fees. You will also likely have to obtain a co-signer (an individual who promises to pay off your debt if you cannot pay it yourself).
How Long After Bankruptcy Can I Get a Mortgage?
You may be able to obtain a mortgage shortly after being discharged from bankruptcy, although likely at a higher interest rate and likely requiring a co-signer. You can help improve your chances of being approved for a mortgage by saving up as much as possible for a down payment, and by showing proof of steady and reliable employment income.
How Long After Bankruptcy Can I Buy a House?
It's possible to buy a house shortly after being discharged from bankruptcy, although you will likely need a co-signer to obtain a mortgage, and that mortgage will likely come at a higher interest rate. After bankruptcy, you may want to focus on rebuilding your credit; getting a secured credit card could be a good place to start.
We're Here to Help
If you're struggling with debt, bankruptcy can provide you with a fresh financial start. However, filing for bankruptcy is a serious decision to make—and it may not be your only solution. Rest assured, your four local MNP LTD Licensed Insolvency Trustee is here to help. We can guide you through your options and provide the unbiased advice you need to choose the best path forward. Get started today by booking a free confidential consultation.
