Non-Dischargeable Debts in Canada: The Complete List (2026)

Some debts in Canada cannot be eliminated through bankruptcy or a consumer proposal — and filing without knowing which ones survive is the most expensive mistake in Canadian insolvency. Section 178(1) of the Bankruptcy and Insolvency Act lists specific debt categories that can remain legally enforceable after discharge, meaning you can complete the entire insolvency process and still owe the full balance. This page is the definitive reference for every non-dischargeable debt category, how each one is treated differently in bankruptcy versus consumer proposals, and the strategic planning framework for mixed-debt files.

If you already know your debt mix, compare your options at the debt relief comparison page. If you need file-specific guidance on non-dischargeable exposure, find a Licensed Insolvency Trustee near you.

What “Non-Dischargeable” Means Under Canadian Law

Non-dischargeable means a debt survives the insolvency process and remains your legal obligation after bankruptcy discharge or consumer proposal completion. The creditor retains full collection rights — including wage garnishment, lawsuits, and asset seizure — on any surviving balance.

The governing law is Section 178(1) of the Bankruptcy and Insolvency Act (BIA). This section lists 11 specific categories of debt that are not released by an order of discharge in bankruptcy. The provision exists because Parliament decided certain obligations — like child support and fraud-related debts — should not be wiped out regardless of financial hardship.

Three critical distinctions most people miss:

1. Non-dischargeable ≠ non-includable. You still list non-dischargeable debts in your bankruptcy filing. The creditor participates in the process. The debt simply survives your discharge.
2. Bankruptcy and consumer proposals treat the same debts differently. Most Section 178(1) debts survive bankruptcy but can potentially be resolved through a consumer proposal if creditors vote to accept.
3. Non-dischargeable is not the same as secured. A mortgage is secured, not non-dischargeable. A child support obligation is non-dischargeable, not secured. These are completely separate legal concepts covered in a later section on this page.

Understanding these distinctions before filing prevents the most common planning failures. For the bankruptcy-specific perspective, see debts bankruptcy does not erase in Canada.

Complete List of Non-Dischargeable Debts in Canada

Section 178(1) of the BIA contains 11 paragraphs — (a) through (k) — each describing a specific category. Here is every category with its real-world application.

1. Court-Ordered Fines, Penalties, and Restitution — s. 178(1)(a)

Any fine, penalty, restitution order, or other order similar in nature imposed by a court survives bankruptcy. This includes criminal fines, provincial offence penalties, restitution orders from criminal proceedings, and regulatory penalties. Parking tickets and traffic fines also fall here. These survive both bankruptcy and consumer proposals.

2. Debts from Fraud, Embezzlement, or Misappropriation — s. 178(1)(d) and (e)

If a court finds that a debt was obtained by fraud, false pretence, or fraudulent misrepresentation, that debt survives bankruptcy. This requires a court determination — the creditor’s allegation alone is not enough. Common examples include obtaining credit by misrepresenting income on applications, running up debts with no intention of repaying, and debts arising from embezzlement or misappropriation while acting in a fiduciary capacity.

The fraud must be proven. If a creditor suspects fraud but does not pursue a court determination, the debt is discharged normally. CRA debt from deliberate tax evasion — filing false returns or hiding income — falls under this category. Regular tax debt from simply failing to pay does not.

3. Child Support and Spousal Support Obligations — s. 178(1)(b) and (c)

All alimony, maintenance, and support obligations — including arrears — survive bankruptcy. This includes court-ordered child support, spousal support under a separation agreement or court order, and any accumulated arrears on these obligations. The ongoing obligation continues and arrears remain enforceable with full collection powers including wage garnishment.

4. Student Loans Under 7 Years — s. 178(1)(g)

Government student loans are non-dischargeable if you ceased to be a full-time or part-time student less than 7 years before the date of bankruptcy. After 7 years, student loans become dischargeable like any other unsecured debt. A hardship application to the court can reduce this period to 5 years in exceptional circumstances.

The 7-year clock starts from the date you ceased to be a student, not from the date you borrowed or the date you stopped paying. For complete timing strategies, see the 7-year rule explained and student loans and bankruptcy Canada.

5. Debts from Assault or Intentional Bodily Harm — s. 178(1)(a.1)

Court awards for damages from assault, sexual assault, or intentional infliction of bodily harm survive bankruptcy. This includes civil judgments for assault, sexual assault awards, wrongful death judgments from intentional acts, and related damages.

6. Property Damage from Intentional Acts — s. 178(1)(d)

Debts from intentional or malicious property damage also survive discharge. This requires proof the damage was deliberate, not accidental.

7. Debts from Fraud by a Fiduciary — s. 178(1)(d)

If you acted in a position of trust (fiduciary capacity) and caused financial harm through defalcation, embezzlement, or misappropriation, those obligations survive bankruptcy.

8. Interest on Non-Dischargeable Debts

Interest that accrues on non-dischargeable debts continues to accumulate during and after bankruptcy. If you owe $30,000 in support arrears when you file bankruptcy and spend 9 months in the process, you exit bankruptcy owing $30,000 plus 9 months of accumulated interest.

Comparison Table: How Each Debt Type Is Treated

This is the table that matters most for planning. Bankruptcy and consumer proposals produce different outcomes for the same non-dischargeable debts.

The critical insight: consumer proposals can resolve many debts that survive bankruptcy. This is why the choice between the two options matters more when non-dischargeable debts are in the mix.

How Consumer Proposals Handle Non-Dischargeable Debts Differently

This is where strategic advantage lives. Under Section 178(1), the non-discharge rules apply specifically to “an order of discharge” — which is a bankruptcy concept. Consumer proposals operate under different provisions (Sections 66.11 to 66.4 of the BIA) and produce a different legal outcome: a binding settlement rather than a discharge.

The practical result: most debts that survive bankruptcy can be included in a consumer proposal. If creditors holding 50% plus one dollar in value vote to accept your proposal, all included debts are bound by the settlement terms — even debts that would otherwise be non-dischargeable in bankruptcy.

What this means for student loans

If you are 4 years past end of studies, your student loans survive bankruptcy but can potentially be included in a consumer proposal. If the Canada Student Loans Program (or provincial equivalent) does not hold enough voting weight to block the proposal, the debt is resolved at the proposal settlement rate — often 20% to 40% of the original balance.

What this means for fraud-related debts

A creditor claiming fraud can vote against your proposal. But if other creditors outvote them, the fraud-related debt is included and settled. The creditor’s only recourse is to challenge the proposal in court, which is expensive and rare.

What still survives both proceedings

Two categories consistently survive both bankruptcy and consumer proposals:

1. Support obligations. Child support and spousal support arrears are not resolved through any insolvency process. You owe these regardless of which option you choose.
2. Court-ordered fines and restitution. Criminal fines and restitution orders from courts generally survive both proceedings.

For a full side-by-side comparison of both options, see consumer proposal vs bankruptcy.

The Student Loan 7-Year Rule: Timing Is Strategy

Student loan non-dischargeability is unique because it has a built-in expiry date. Once 7 years pass from the date you ceased to be a student, the debt becomes fully dischargeable in bankruptcy and eliminable through a consumer proposal.

This creates a timing decision that affects thousands of Canadian insolvency files every year.

Scenario: Filing too early

Priya in Brampton has $52,000 in student loans (5 years post-studies) and $28,000 in credit card debt. If she files bankruptcy now, she exits with credit cards eliminated but $52,000 in student loans intact. A consumer proposal covering all $80,000 could settle everything at 30% — $24,000 over 5 years — if creditors accept.

Scenario: Strategic timing

David in Halifax is 6 years and 4 months post-studies with $35,000 in student loans and $22,000 in unsecured debt. Filing bankruptcy in 8 months means his student loans cross the 7-year threshold during the bankruptcy process. His trustee can time the filing so discharge occurs after the 7-year mark, making the student loans dischargeable.

For complete timing analysis, see the 7-year rule explained.

CRA Debt: What’s Dischargeable vs What Isn’t

CRA debt causes more confusion than any other category because the answer depends on how the debt arose, not how much you owe.

The key distinction: failing to pay taxes is not the same as evading taxes. If you filed accurate returns but could not afford to pay the balance owing, that debt is fully dischargeable. If you deliberately filed false returns, hid income, or participated in fraudulent tax schemes, CRA can argue the debt arose from fraud and oppose discharge.

Most personal income tax debt in Canadian insolvency files is dischargeable. CRA is an aggressive collector, but its debts respond well to both bankruptcy and consumer proposals.

Payroll source deductions are the hard exception. If you were an employer who withheld CPP, EI, and income tax from employee paycheques and failed to remit those amounts, the money never legally belonged to you. These are trust funds under Section 227.1 of the Income Tax Act and survive both bankruptcy and consumer proposals.

Secured Debts vs Non-Dischargeable Debts — Separate Legal Concepts

People conflate these constantly, and the confusion leads to bad decisions. Secured debts and non-dischargeable debts are completely different legal concepts that require different strategies.

A mortgage is not non-dischargeable. If you surrender your house in bankruptcy, the mortgage is satisfied by the asset. If there is a shortfall (you owe more than the house is worth), the deficiency becomes unsecured debt and is dischargeable.

A child support obligation is non-dischargeable but not secured. There is no collateral backing it. The family court simply retains full collection power regardless of your insolvency status.

Understanding this distinction prevents two common errors:

1. Assuming secured debts survive like non-dischargeable debts. They do not. You can eliminate a secured debt by surrendering the asset.
2. Assuming non-dischargeable debts are untouchable. Some can be resolved through a consumer proposal even though they survive bankruptcy.

For asset-protection strategies in bankruptcy, see what happens when you file bankruptcy in Canada.

How to Plan Around Non-Dischargeable Debts

If your debt mix includes both dischargeable and non-dischargeable obligations, the filing decision is about cash-flow engineering, not just debt elimination.

Step 1: Map every debt by category

List every obligation with balance, creditor, interest rate, and legal category (dischargeable, non-dischargeable, secured). This is your debt map.

Step 2: Calculate your post-filing reality

Model what your monthly budget looks like after insolvency eliminates the dischargeable debts. The question is: can you afford the surviving obligations on freed-up cash flow?

Step 3: Compare bankruptcy vs consumer proposal outcomes

For mixed-debt files, run both scenarios:

• Bankruptcy scenario: Dischargeable debts eliminated. Non-dischargeable debts remain at full balance plus ongoing interest. Surplus income payments required during bankruptcy.
• Consumer proposal scenario: All debts (including some non-dischargeable categories) potentially settled at 20–40%. Fixed monthly payment. No surplus income exposure.

Step 4: Prioritize non-dischargeable debt repayment

After eliminating dischargeable debts through insolvency, direct freed cash flow to the highest-interest non-dischargeable obligations first. Support arrears often carry enforcement penalties. CRA trust fund debts accrue interest at prescribed rates.

Step 5: Model the 5-year total cost

Scenario: Mixed-debt strategic filing

Liam in Calgary owes $18,000 in credit card debt, $12,000 in CRA income tax, $8,000 in support arrears, and $6,000 in court fines. Total: $44,000.

• Credit card debt: Dischargeable in both options.
• CRA income tax: Dischargeable — regular tax debt, not evasion.
• Support arrears: Non-dischargeable in both options. Must be paid separately.
• Court fines: Non-dischargeable in both options.

If Liam files bankruptcy, he eliminates $30,000 (credit cards + CRA) and still owes $14,000 (support + fines). His monthly payments drop enough to begin clearing the $14,000 over 2–3 years.

Without filing, Liam pays $44,000 at blended interest rates that could push total repayment past $55,000 over 5+ years. Insolvency saves him approximately $25,000 and 2+ years of payment stress.

Compare your own scenarios at the debt relief comparison page.

When to Get LIT Advice on Mixed-Debt Files

You should consult a Licensed Insolvency Trustee before filing if any of these apply:

• You have support arrears exceeding $5,000. These survive both options and need a parallel repayment strategy.
• You have student loans and are within 2 years of the 7-year threshold. Timing your filing can change outcomes by tens of thousands of dollars.
• CRA is claiming fraud or evasion on your tax debt. The dischargeable vs non-dischargeable distinction depends on facts that need professional analysis.
• A creditor has alleged fraud on a credit application. If the creditor pursues a court finding, the debt could survive bankruptcy.
• You owe payroll source deductions. These are trust funds that survive both proceedings and must be planned around.
• Your non-dischargeable debts exceed 40% of total debt. At this level, insolvency alone does not solve your problem — you need a combined strategy.

A Licensed Insolvency Trustee consultation is free and confidential. The trustee can model your specific debt map and show you the post-filing monthly budget under each option. Find a LIT near you.

If you are already in active collection — garnishment letters, CRA freezes, or creditor lawsuits — the stay of proceedings from either bankruptcy or a consumer proposal stops collection within 24 to 48 hours of filing. Do not wait to map your debts if collection pressure is escalating.

Bottom Line

Non-dischargeable debts are the debts that survive insolvency. They are defined by Section 178(1) of the Bankruptcy and Insolvency Act and include support arrears, court fines, fraud-related debts, recent student loans, and CRA trust fund obligations. But “non-dischargeable in bankruptcy” does not always mean “non-dischargeable in a consumer proposal” — and that distinction is where strategic advantage lives.

The right approach for any mixed-debt file is to map every debt, model the post-filing budget under both options, and choose the path that leaves you with sustainable monthly cash flow after the surviving debts are accounted for. Filing without this analysis is guessing, and guessing with non-dischargeable debts is expensive.

Start with the debt relief comparison tool, then connect with a Licensed Insolvency Trustee for file-specific modelling.

Disclaimer: This article provides general educational information about Canadian insolvency law. It is not legal advice. Consult with a Licensed Insolvency Trustee for advice specific to your circumstances.

Last updated: April 1, 2026