Which Debts Survive a Bankruptcy Discharge in Canada?

A bankruptcy discharge releases you from most unsecured debts. Credit-card balances, lines of credit, unsecured bank loans, payday loans, utility arrears, and unpaid rent typically disappear.

Canada Revenue Agency debts — income tax owing, for example — are also dischargeable in a bankruptcy, which surprises many people.

This is the fresh start the process is designed to deliver: the debts that piled up beyond your ability to pay stop following you.

Some obligations are specifically excluded from a discharge and remain yours to pay. Secured debts top the list: a car loan or mortgage survives unless you surrender the asset, because the lender's claim is against the property itself.

Family obligations are protected too — spousal or child support ordered by a court cannot be discharged. So can fines and penalties ordered by a court, and any debt arising from fraud or from misrepresenting your finances when you obtained it.

There is a legal nuance worth knowing: where a creditor has an enforceable security interest that was properly registered, the discharge releases the personal liability to pay but the creditor may still enforce the security against the asset.

Student loans are their own case. A government student loan generally cannot be discharged unless you have been out of school for at least seven years (measured from when you ceased to be a full- or part-time student).

That window can be shortened in cases of genuine hardship — an application can be made after five years — but it is decided by the court, not automatically.

If a student loan is part of your situation, raise it with your trustee early; it affects how the whole plan is structured.

Understanding what survived tells you your real starting point. If a secured car loan or a support obligation is still on your books, your budget must carry it, and any new borrowing has to sit on top of that.

It also tells you what a lender sees. Debts excluded from the discharge are still reported as active, and they are weighed as part of your affordability — which is why being honest about them keeps you out of a repayment you cannot sustain.

The cleanest rebuild happens when new credit is sized against a budget that already accounts for everything that survived.

Once discharged, you can apply like any other borrower, and lenders who assess income rather than credit score will consider you. FiveSix introduces you to licensed Canadian lenders through one free request — no cost, no obligation, and no decision made by us.

Charles Smith is FiveSix's credit and insolvency writer, covering bankruptcy, consumer proposals, and rebuilding credit for Canadians. His guides are written to be plain, honest, and grounded in Canadian law.