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Under the Canadian Bankruptcy and Insolvency Act, any income above the living expenses set by the Office of the Superintendent of Bankruptcy (OSB) is considered surplus. The trustee uses a formula that takes into account the size of your family and the cost of living required to meet the family’s needs. At that point, during the time between filing for bankruptcy and the discharge of debts (either nine or twenty-one months), any income above the determined amount will be considered surplus.
If you have surplus income up to $1,000, you are required to surrender 50% of it to the bankruptcy trustee for dispersal to creditors. Surplus income of more than $1,000 a month may require you to hand over 75% of the extra money for the duration of the bankruptcy period.
This is where your monthly budget submission to the trustee also comes in; your proof of income and proof of extraordinary expenses will be used to determine the portion of funds that will be surrendered to deal with your debts.
The tables used to calculate surplus income are quite complex. A consultation with a bankruptcy trustee will give you a better idea of how much of your income will be considered surplus.
It is important to note that recent amendments to the Canadian Bankruptcy and Insolvency Act make it manadatory that, if a person is required to pay surplus icome in the bankruptcy, they will not be elible for a discharge for 21 months. This would apply only to first time bankrupts. Should no surplus income be payable, then first time bankrupts would generally be discharged in 9 months.
IN THIS SECTION
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- Why did my trustee tell me to file all outstanding tax returns?
- I’m declaring bankruptcy because of taxes. Is this allowed?
- Will I still owe my student loan after bankruptcy?
- I can’t afford to pay back my student loan and it’s been less than seven years since I left school-what are my options?
- How long does bankruptcy last?
- Can I keep my car during bankruptcy?
- Can I keep my RRSP during bankruptcy?
- Can I keep my home if I declare bankruptcy?
- Will I still be able to rent an apartment or home if I declare bankruptcy?
- Can I keep a credit card during bankruptcy?
- Is it okay to use a credit card if I am thinking about bankruptcy?
- Can I get a checking account after bankruptcy?
- I co-signed on a loan for someone who declared bankruptcy. What happens now?
- If I’m married and I file for bankruptcy, does it affect my spouse’s credit?
- If my spouse declares bankruptcy and I am listed on their credit cards, am I responsible for the debt?
- I am divorced and my ex has declared bankruptcy. Do I still owe for debts and credit cards that I co-signed with my spouse?
- If I file for bankruptcy, will it be noted on my spouse’s credit file?
- Will filing for bankruptcy affect my job situation?
- Who will find out about my bankruptcy?
- Can I get utility services (telephone, cable, hydro, gas, etc.) after bankruptcy?
- Can I keep any money if I declare bankruptcy?
- What is surplus income?
- Can I go to jail for not paying my debts?
- The collection agency is threatening to take me to court: can they do that?
- What happens if a collection agency takes me to court?
- I am behind on my debt payments; can a collection agency take my furniture, electronics, clothes, etc.?
- I am being harassed by a collection agency: what can I do?
- Can I stop a wage garnishment?
- How do I find out if someone is bankrupt?
- What is Chapter 7 bankruptcy?
- What is Chapter 13 bankruptcy?
- What happens if I live in both Canada and the U.S. and declare bankruptcy?
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