In my meetings with clients, I am often times asked “what are non-discretionary expenses listed under OTHER with a personal bankruptcy?”.
The answer is, there is no list of ‘other non-discretionary expenses’ in the Bankruptcy and Insolvency Act (BIA).
Let me first explain the process. When an individual files personal bankruptcy in Ontario, they are required to submit monthly income reports to the trustee. Why?
These reports allow the trustee to monitor the bankrupt’s income and determine the amount of surplus income payable
The BIA states that it is the responsibility of the trustee to determine the amount of surplus income payable
When calculating the amount of surplus income payable the debtor is allowed to deduct certain non discretionary expenses from their income which reduces the amount of surplus income payable
Non discretionary expenses in Ontario include:
– child and spousal support
– child care costs
– medical condition expenses, and
– OTHER non-discretionary expenses
The trustee must consider non-discretionary expenses including some “other expenses” that do not fit into one of the categories listed above.
Every case is different and any ‘other non discretionary expenses’ must be discussed with and agreed to with your trustee.
Obviously, I can’t speak for other trustees but in the past I have allowed the following as ‘other non discretionary expenses’:
Non-reimbursed expenses as a condition of employment (ie: uniform rental, travel expenses, etc.)
High travel expenses incurred to receive medical treatment (ie: someone living in Waterloo who needs to travel to London twice a week to receive treatment)
Court ordered restitution payments that are not dischargeable through bankruptcy
As I have mentioned ‘other non-discretionary expenses’ need to be determined with your trustee and each case is different.
What if you disagree with your trustee?
If you disagree with how your trustee has calculated your surplus income payments or what ‘other non-discretionary expenses’ have been allowed, you can request mediation. Mediation is a process where you, your trustee and a mediator from the Office of the Superintendent of Bankruptcy meet to review your case.
How can you completely avoid paying surplus income?
Consider avoiding personal bankruptcy and make a consumer proposal instead. You are not required to submit monthly income reports and therefore there are no surplus income obligations.
