Does it cost anything to declare bankruptcy?

The short answer is yes. The longer answer depends on whether you have any non-exempt assets, the size of your income, and how many dependents you have.

Any assets (money and possessions) that are not exempt under federal regulations or the laws of the province you live in will have to be surrendered to the bankruptcy trustee. They will then be liquidated and the funds raised will be distributed among your creditors as determined by the bankruptcy laws.

If you have any tax refunds or GST coming to you during the period of bankruptcy, that money will be used to pay creditors.

Once you don’t have to service your unsecured debts, you may find yourself with an income surplus. Effective September 18, 2009 the Surplus Income Directive as it applies to bankruptcies was amended.(See Surplus Income Worksheet), As a simple rule of thumb, if you are required to make surplus income payments to the Trustee your bankruptcy will be for 21 months. If you are not required to make such payments then your bankrptcy wil be for 9 months. Notwithstanding the non-requirement to pay surplus income you will be required to pay the Trustee a minimum amount for the 9 month period of bankruptcy.

Any income above the determined guidelines (the limit is set by looking at your family size, expenses, and earnings) will have to be distributed to your creditors. This is one of the reasons why you are required to fill out and present a monthly budget to the bankruptcy trustee until your debts are discharged by the court.

There are costs attached to filing for bankruptcy, including fees, mailing charges, etc. It is likely you will be asked to reimburse your trustee for these expenditures.

IN THIS SECTION