When you file for bankruptcy in Canada, you’re allowed to keep a portion of your income each month. If you make more than that portion, you have to contribute half of that surplus income into your bankruptcy estate. That money is distributed to your creditors. These limits have recently been increased due to inflation (as they do every year). The new limits are as follows (as stated on the Office of the Superintendent of Bankruptcy website):
During the bankruptcy period, you will be required to send your trustee a copy of your income and expense statements (i.e. medical expenses, child care, etc.) each month so the trustee can calculate your net income and determine if any surplus income payments are required. Your surplus income is then any amount that your net income exceeds the appropriate surplus income limit.
Surplus income payments are required by law. The Bankruptcy and Insolvency Act sets out how to calculate the required payment, and your trustee is required to report to the court whether or not those payments have been made. If you are required to make surplus income payments, you will be in bankruptcy for 21 months. Therefore, if your surplus income payments are substantial, you may wish to consider alternatives to bankruptcy, such as a consumer proposal.
If you are considering filing personal bankruptcy or making a consumer proposal, contact us for a free, no obligation consultation.