How Much Does Bankruptcy Cost in Canada 2026? (By Province)

Bankruptcy in Canada costs $1,800 to $2,500 minimum for low-income filers with no assets, or $5,000 to $15,000 or more when surplus income payments are required. Costs depend on three factors: federally regulated trustee fees ($750 base plus $85 times 2 counselling sessions plus administration), surplus income payments (50% of income above $2,666 per month threshold for single person), and non-exempt asset equity you must pay to keep your property.

Understanding exact costs before filing helps you compare bankruptcy to consumer proposals and other debt relief options. Licensed Insolvency Trustees provide free initial consultations with personalized cost estimates based on your income, household size, and assets.

What are bankruptcy trustee fees in Canada?

Trustee fees are federally regulated under Rule 128 of the Bankruptcy and Insolvency Act. The government sets a tariff structure that determines how much trustees can charge based on money collected during your bankruptcy. You cannot negotiate these fees—they are the same across all trustees in Canada.

The tariff formula calculates fees as 100% of the first $975 collected, 35% of amounts from $975 to $2,000, and 50% of amounts over $2,000. For most simple bankruptcies with no assets, the base fee structure applies. For bankruptcies with asset sales or high surplus income, the trustee receives additional fees from the percentage formula.

All fees are deducted from your monthly payments—you never pay the trustee directly beyond your regular payment schedule. If you pay $250 per month for 9 months ($2,250 total), the trustee deducts their fees first, then distributes any remaining funds to your creditors. Many low-income bankruptcies generate no funds for creditors because the trustee fees consume all payments.

GST or HST applies to trustee fees depending on your province. Ontario charges 13% HST, Alberta charges 5% GST, and rates vary elsewhere. Your trustee provides a full fee breakdown during your initial consultation including applicable taxes.

You cannot file bankruptcy without paying the minimum fees. If you have zero income and no assets, some provinces offer legal aid programs that may cover bankruptcy costs. The trustee may also allow extended payment plans over the full 9 to 21 month bankruptcy period rather than requiring immediate payment.

How surplus income payments increase bankruptcy costs

Surplus income is the amount your net monthly income exceeds the federal threshold for your household size. The Office of the Superintendent of Bankruptcy updates thresholds annually based on Statistics Canada Low Income Cutoffs. If your income exceeds your threshold by $200 or more, you must pay 50% of the excess to your bankruptcy estate.

The 2025 Superintendent’s Standards set these thresholds:

Surplus income extends your bankruptcy timeline from 9 months to 21 months for first-time bankruptcies. Second-time bankruptcies extend from 24 months to 36 months with surplus. The longer timeline significantly increases total cost because you pay surplus for the entire period.

Calculate surplus with this formula: (Net Monthly Income minus Threshold) times 50% equals Monthly Surplus Payment. Net income includes all sources—employment, self-employment, government benefits, spousal support received—minus mandatory deductions (income tax, CPP, EI). Voluntary deductions like RRSP contributions and extra pension payments do not reduce net income for surplus calculations.

Here are realistic examples showing how surplus income affects total bankruptcy costs:

Income fluctuations during bankruptcy affect surplus calculations. If you get a raise, your surplus increases. If you lose employment, your surplus decreases or may be eliminated entirely. You must report income changes to your trustee monthly. The trustee recalculates surplus each month based on current income, which can extend or shorten your discharge timeline.

Spouse’s income affects your surplus calculation even if your spouse is not filing bankruptcy. The trustee counts total household income and uses the threshold for your combined household size. A married couple where one spouse earns $5,000 per month and files bankruptcy pays surplus based on the two-person threshold of $3,318, not the single-person threshold of $2,666.

Deductible expenses reduce surplus income in specific situations. Child support or spousal support you pay is deducted from income before calculating surplus. Court-ordered fines are deductible. Medical expenses exceeding 20% of net income may be deductible with trustee approval. Child care expenses required for employment are deductible. Standard living expenses like rent, food, and utilities do not reduce surplus income.

Do assets increase bankruptcy cost?

Non-exempt asset equity forces you to pay the trustee or surrender the asset. Each province sets exemption amounts for home equity, vehicle equity, household goods, and other property. If your equity in any asset exceeds the provincial exemption, you must pay the difference to keep the asset, or the trustee seizes and sells it.

Home equity creates the largest bankruptcy costs for many filers. Provincial exemptions range from $0 in Quebec and Newfoundland to $40,000 in Alberta. If you have $50,000 equity in Ontario where the exemption is $10,783, you must pay $39,217 to the trustee. Most people cannot pay this amount, forcing them to choose between losing their home or filing a consumer proposal instead.

Calculate home equity as fair market value minus outstanding mortgage minus selling costs (typically 5%). If your home is worth $500,000 with a $400,000 mortgage, your equity is approximately $75,000 after $25,000 selling costs. In British Columbia where the exemption is $12,000 in Greater Vancouver, you would owe the trustee $63,000 to keep your home in bankruptcy.

Vehicle equity works the same way. Provincial vehicle exemptions range from $5,000 to $7,117. If you own a vehicle worth $20,000 outright in Ontario where the exemption is $7,117, you must pay $12,883 to keep the vehicle. Financed vehicles are easier—if your vehicle is worth $20,000 with a $15,000 loan, your equity is $5,000, which is below Ontario’s exemption.

RRSP contributions made in the 12 months before bankruptcy are not exempt and must be paid to the trustee. If you contributed $10,000 to your RRSP in the year before filing, the trustee claims that $10,000. RRSP contributions older than 12 months are fully protected regardless of amount.

You have three options when asset equity exceeds exemptions. Option one: pay the non-exempt amount to the trustee in a lump sum or installment payments during your bankruptcy. Option two: refinance your home or get a home equity line of credit to extract the equity for the trustee. Option three: surrender the asset and the trustee sells it, paying you the exempt amount and distributing the rest to creditors.

Most people with significant home equity choose consumer proposals over bankruptcy. Proposals protect 100% of home and vehicle equity regardless of amount. Compare your bankruptcy asset buyout cost to what you would pay in a consumer proposal—proposals often cost less for homeowners with $20,000 or more in non-exempt equity.

What is the total cost of bankruptcy by scenario?

Total bankruptcy cost combines trustee fees, surplus income payments, and asset buyout payments. Real-world scenarios show how these factors interact to determine what you actually pay.

Low-income filers with annual income under $32,000 (single person) typically have no surplus income. Total cost is trustee fees only—approximately $1,800 to $2,500 paid over 9 months at $200 to $275 per month. This is the cheapest bankruptcy scenario and discharges debts fastest. If you have no income at all, trustees may accept minimum payments of $100 to $150 per month over the full 9 months.

Moderate-income filers earning $40,000 to $60,000 annually as single persons usually have surplus income. Total costs range from $8,000 to $18,000 depending on exact income and household size. Timeline extends to 21 months. Monthly payments typically range from $380 to $850 covering both trustee fees and surplus income. Renters with no assets pay less than homeowners who must buy out non-exempt equity.

High-income filers earning over $70,000 annually face substantial costs. A single person earning $80,000 pays approximately $44,000 over 21 months, or about $2,095 per month. Adding non-exempt home equity pushes total costs over $75,000 to $100,000. At these income and equity levels, consumer proposals almost always cost less than bankruptcy.

Second-time bankruptcies add costs beyond first-time bankruptcies. The filing fee doubles from $86 to $172. Discharge timeline extends from 24 to 36 months minimum depending on surplus income. If you have surplus income in a second-time bankruptcy, you pay for 36 months instead of 21 months—a 71% increase in surplus payments. Second bankruptcies also face more scrutiny from trustees and creditors, potentially requiring court hearings that add legal costs.

Third-time or subsequent bankruptcies have no automatic discharge. You must apply to court, which requires a hearing and often legal representation. Court costs, lawyer fees, and extended timelines add thousands in expenses. Many people with three or more bankruptcies are denied discharge or receive conditional discharge requiring partial debt repayment. Consumer proposals are strongly recommended over third bankruptcies.

How do bankruptcy costs compare to consumer proposal costs?

Consumer proposals reduce unsecured debt by 60 to 80% on average, meaning you pay 20 to 40 cents per dollar owed. Total cost depends on your debt amount, income, and assets—not just income like bankruptcy surplus calculations. Proposal payments are fixed for 3 to 5 years and never increase even if your income rises.

For someone with $50,000 in unsecured debt, a typical consumer proposal settles at 30% ($15,000 paid over 4 years). Monthly payments are $312.50 for 48 months. This protects all home equity, vehicle equity, and RRSPs regardless of amount. Total cost is fixed at $15,000 plus approximately $3,500 in Licensed Insolvency Trustee fees (included in the payment plan), for approximately $18,500 total.

Compare this to bankruptcy for the same person with $50,000 annual income as a single person: surplus income is approximately $10,500 over 21 months, plus $2,000 in trustee fees, totaling $12,500. Bankruptcy appears cheaper until you add asset buyout costs. If this person has $15,000 in non-exempt home equity, bankruptcy total becomes $27,500—significantly more than the $18,500 consumer proposal.

High-income earners save substantially with consumer proposals. A single person earning $80,000 annually faces $44,000 in bankruptcy surplus income alone. A consumer proposal for this person with $60,000 debt might settle at 35% ($21,000) paid over 5 years at $350 per month. Total proposal cost is approximately $24,500 including fees—a savings of nearly $20,000 compared to bankruptcy.

Asset protection is the biggest difference. Bankruptcy requires paying non-exempt equity or surrendering assets. Consumer proposals protect all equity—$50,000 in home equity, $20,000 in vehicle equity, $100,000 in RRSP contributions from the past year—everything stays with you. For homeowners with significant equity, proposals are almost always cheaper than bankruptcy.

Proposal payments never increase. If you get a raise halfway through your proposal, your payment stays the same. In bankruptcy, income increases trigger higher surplus calculations and potential timeline extensions. If you lose your job during a proposal, you can typically pause payments for 3 to 6 months without losing the proposal. Bankruptcy offers less flexibility.

Credit impact differs slightly. Proposals report as R7 rating and remain on credit reports for 3 years after completion (typically 6 to 8 years total from filing). Bankruptcy reports as R9 rating for 6 to 7 years from discharge. The R9 is more severe and some lenders consider it worse than R7, though both significantly damage credit. Mortgage lenders typically treat proposals and bankruptcies similarly for the first 2 to 3 years after completion.

Consumer proposals have a debt limit of $250,000 excluding mortgage on your principal residence. If your unsecured debt exceeds $250,000, you cannot file a consumer proposal—bankruptcy or Division I proposal under the BIA are your only options. For debts under $250,000, proposals work for almost everyone with steady income.

Calculate your consumer proposal cost to see exact monthly payments and compare to your bankruptcy cost estimate. Most Licensed Insolvency Trustees offer both options and recommend the lower-cost solution for your specific situation.

Do second or third bankruptcies cost more?

Second-time bankruptcies cost significantly more than first-time bankruptcies. The federal filing fee doubles from $86.16 to $172.34. Discharge timeline extends from 9 to 21 months (first-time) to 24 to 36 months (second-time) depending on surplus income. Automatic discharge is not guaranteed—court application may be required.

Surplus income timeline extension creates the largest cost increase. If you have surplus income in a second bankruptcy, you pay for 36 months instead of 21 months used in first bankruptcies. This is a 71% increase in surplus payments. A person paying $800 per month in surplus income pays $16,800 over 21 months in a first bankruptcy but $28,800 over 36 months in a second bankruptcy.

Trustee fees increase slightly due to longer administration period. Base fees remain similar, but trustees collect their percentage of receipts over a longer period. Administrative costs rise because the trustee manages your file for 24 to 36 months instead of 9 to 21 months.

Second bankruptcies face heightened scrutiny from trustees and creditors. Creditors are more likely to request a creditor meeting to question your finances. Trustees investigate more thoroughly to ensure you are not abusing the bankruptcy system. Any failure to comply with duties or evidence of asset hiding may result in denied discharge.

Credit impact is much worse. Second bankruptcies remain on TransUnion credit reports for 14 years from discharge—more than double the 6 years for first bankruptcies. Equifax still reports second bankruptcies for 7 years, but the fact that it is a second bankruptcy shows in your credit file and lenders treat it more harshly.

Third-time bankruptcies have no automatic discharge timeline. You must apply to court for a discharge hearing. The court reviews your financial history, reasons for multiple bankruptcies, and current situation. Judges may deny discharge entirely, grant conditional discharge requiring partial debt repayment (often 25% to 50% of debts), or grant absolute discharge after additional time.

Court hearings add legal costs. Many third-time bankrupts hire lawyers to represent them at discharge hearings, adding $2,000 to $5,000 in legal fees. The trustee opposes discharge more frequently in third bankruptcies, requiring court arguments and evidence presentation.

Creditors may sue to deny discharge in second or third bankruptcies. If creditors believe you are fraudulently using bankruptcy to avoid legitimate debts, they can oppose your discharge and present evidence to the court. Losing a discharge opposition means your debts are not eliminated and you wasted bankruptcy costs.

Licensed Insolvency Trustees strongly discourage multiple bankruptcies. If you filed bankruptcy once already, consumer proposals are almost always the better choice for subsequent debt problems. Proposals have no limit on how many you can file (though you can only have one active at a time) and do not face the escalating costs and restrictions of multiple bankruptcies.

Can I afford bankruptcy if I have no income?

You can file bankruptcy with zero income. The Bankruptcy and Insolvency Act does not require minimum income to qualify. The insolvency test only requires that you owe at least $1,000 and cannot pay your debts—no income clearly demonstrates inability to pay.

Trustee fees must still be paid, but payment schedules are flexible. The minimum trustee fee is approximately $1,800 including filing fees and counselling sessions. With no income, you can arrange payment plans over the full 9-month discharge period at roughly $200 per month. If even this is unaffordable, trustees may accept lower payments over longer periods.

Some provinces offer legal aid programs that cover bankruptcy costs for low-income individuals. Eligibility varies by province and typically requires income below specific thresholds (often below $20,000 annually for singles). Legal aid may pay the trustee fees directly, allowing you to file bankruptcy at no cost. Contact legal aid in your province to determine eligibility.

Family members can pay bankruptcy costs on your behalf. If a parent, sibling, or other relative wants to help you get a fresh start, they can pay the trustee directly. This is legal and common. The payment is a gift, not a loan, so it does not create new debt you must repay.

Asset sales can fund bankruptcy costs. If you have non-exempt assets the trustee would seize anyway—a vehicle with $10,000 equity above your provincial exemption, or non-exempt home equity—the trustee sells those assets and deducts fees from the proceeds. Any remaining funds go to creditors. This costs you nothing directly because you would lose the non-exempt assets regardless.

Government benefits count as income for surplus calculations. If you receive Employment Insurance, CPP, disability benefits, or social assistance, these count toward your monthly income. However, most benefit amounts are low enough that they do not trigger surplus income. A person receiving $1,500 per month in benefits as a single person is well below the $2,666 threshold and owes no surplus.

No income means 9-month automatic discharge with no surplus payments for first-time bankrupts. You attend two counselling sessions, file monthly income reports showing zero income, and receive automatic discharge at 9 months. This is the fastest and cheapest bankruptcy scenario. Total cost is minimum trustee fees ($1,800 to $2,500) paid over 9 months or longer if needed.

Working part-time or gig work during bankruptcy creates surplus income if earnings are high enough. If you have no income when filing but later find part-time work earning $3,000 per month as a single person, you would have ($3,000 minus $2,666) times 50% equals $167 per month in surplus. Your discharge timeline extends from 9 months to 21 months. Report all income changes to your trustee immediately to avoid complications at discharge.

Bottom Line

Bankruptcy costs $1,800 to $2,500 minimum for low-income filers with no assets and no surplus income over 9 months, or escalates to $5,000 to $15,000 or more when surplus income applies—50% of net income exceeding $2,666 per month threshold for single persons in 2025, paid for 21 months in first-time bankruptcies. Non-exempt asset equity adds substantial costs: Ontario homeowners with $30,000 equity above the $10,783 exemption must pay $19,217 to keep their home, while vehicle equity above $7,117 in Ontario requires paying the difference or surrendering the vehicle. High-income earners and homeowners with significant equity typically pay less through consumer proposals, which reduce debt by 60 to 80%, protect all home and vehicle equity regardless of amount, and charge fixed monthly payments that never increase—a single person earning $80,000 annually faces approximately $44,000 in bankruptcy surplus alone but might pay only $24,500 total in a consumer proposal for the same debt. Second-time bankruptcies extend timelines from 24 to 36 months with surplus income and double the filing fee, while third-time bankruptcies require court applications with no automatic discharge and potential legal costs of $2,000 to $5,000, making consumer proposals the better choice for anyone facing a second or third insolvency. Calculate your consumer proposal cost to compare total bankruptcy costs versus proposal fixed payments for your specific income, assets, and debt situation.

Disclaimer: This article provides general information about bankruptcy costs in Canada and should not be considered financial advice. Costs vary by province, income, and assets. Consult with a Licensed Insolvency Trustee for a personalized cost assessment.

Last updated: February 2, 2026