Repeat Bankruptcies and the Integrity of the Canadian Bankruptcy Process

One of the often-cited purposes of bankruptcy law is to permit the rehabilitationof the debtor as a citizen unfetteredby past debts. The bankruptcy regime thus allows an honest but unfortunate debtor toobtain a fresh start through the discharge. However, Canadian bankruptcy law has long taken the position that a repeat bankruptcy will preclude an order of an absolute discharge. The different treatment of repeat bankrupts suggests that there are other policy objectives at play beyond rehabilitation. While the court must consider the interests of the debtor and creditors in a contested discharge hearing an equally important consideration is the protection of the integrity of the bankruptcy system. Where there are repeatbankruptciesthe court\u27sfocusshiftsfrom rehabilitationof the debtor to the integrity of the bankruptcy regime, the protection of creditorsand the public. These traditional considerations have been altered by recent amendments to the Bankruptcy and Insolvency Act. These amend- ments permit a second-time bankrupt to obtain an automaticdischarge after 24 months (if no surplus income and no objection) or after 36 months (if surplus income and no objection). This articleconsiders how the Canadianbankruptcy regime deals with second-,third-,fourth- andfifth-time bankruptcies. The article also examines whether mandatory counselling has had any impact on reducing repeat bankruptcies