Automatic discharge

An “automatic discharge” is a process in the Bankruptcy and Insolvency Act (BIA) that allows a person who goes bankrupt to be released from their debts, simply over time. It can only happen in the absence of an opposition from a creditor, the trustee, or the OSB (Office of the Superintendent of Bankruptcy). To be eligible for an automatic discharge, debtors must meet a series of conditions set by the BIA and ensure full cooperation with the trustee.

Conditions to be met for obtaining an automatic discharge:

  1. Having paid the monthly payments as provided by the Law or as agreed upon with the trustee.
  2. Participated in the two counseling sessions (with your counselor).
  3. Cooperated with your trustee by answering all his/her questions and submitting any document that s/he may have requested for the proper administration of your file.
  4. Ensure that the Superintendent’s Office, the trustee, or your creditors have not filed an objection to your discharge.
  5. An automatic discharge is only possible for a 1st or 2nd-time bankruptcy.

When these conditions are fulfilled, the bankrupt will obtain his/her discharge simply with the passage of time, hence the term “automatic discharge” as opposed to a “discharge” which is granted by the Court. The duration of personal bankruptcy varies depending on whether it’s a 1st bankruptcy or not, and based on the average net income earned during the bankruptcy.

Timeline to obtain an automatic discharge:

  • For a 1st-time bankruptcy: the period is 9 months if there’s no surplus income or 21 months with surplus income.
  • For a 2nd-time bankruptcy: the period is 24 months without surplus income and 36 months with surplus income.

When the conditions and timelines are met, the automatic discharge takes effect automatically, and a certificate of discharge is then issued by the trustee and sent to you normally in the next 30 days. If not, it is up to the Court to decide on your discharge following a hearing.