Surplus Income Limits for Bankruptcy in Ontario in 2017

| Category: Bankruptcy FAQ | Surplus Income
Category: Bankruptcy FAQ | Surplus Income | (12) comments

The amount you are required to pay if you declare bankruptcy is based on your income.  The more you earn, the more you are required to pay.  This limit is adjusted each year, and the Office of the Superintendent of Bankruptcy has released the Surplus Income Limits for 2017, based on family size:

Family Size Limit
1
$2,121
2
$2,640
3
$3,246
4
$3,941
5
$4,470
6
$5,041
7
$5,612

The bankruptcy surplus income limits for 2017 may look complicated, but the math is relatively simple.

If you are a family of two (such as a single parent with one child) and you earn $3,040 after tax each month, you are $400 over the limit for a family of two of $2,640, so you are required to make a surplus income payment of half of the amount you are over, or $200 per month.

If this is your first bankruptcy and your average income is more than $200 over the limit each month, your bankruptcy is extended for an additional year, so you would be bankrupt for a minimum of 21 months (instead of the basic 9 months).

Each situation is different, and in many cases a consumer proposal is a better option, so we suggest you contact a licensed Ontario bankruptcy trustee for a complete, no charge, no obligation review of your options.

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  1. Christene

    I have filed for bankruptcy for a second time. It is all related to the loss of my job and home. I tried to rent the house but the people I rented to didn’t pay for over 3 months and I lost my house. When the dust settled I owed over $48,000 I have been paying $180 per month to my trustee. I don’t feel confident that she is telling me all the information I need. I am the only one going bankrupt but my present partner has pension income and works full time. Do we have to provide his income to the trustee? Shouldn’t it be based on just my income? I am working again. She has never once used the word surplus income instead just encouraging me to put money aside because there is a chance I will have to pay more. I understand the surplus rule once I looked it up on your site. As you can imagine; we are very stressed over this. It is causing so much tension in our lives. I have been preparing monthly income/expense statements for them since January 2013. Not once has anyone bothered to look at them. Of course I don’t feel I’m bad at budgeting. The only debt was for the house, all of my other bills are paid promptly. As a trustee, who do you actually work for? My creditors, me or yourselves? I suspect that the more money you can get from me would increase the amount you are paid as well? Who does the $180/ month I pay go to? Thank you very much for your time. It is truly appreciated.

    Reply
  2. J. Douglas Hoyes, Trustee Post author

    Hi Christene.

    Under the government’s rules, surplus income is based on your family income, so yes, your partner’s income is also included. However, you only pay your portion of the calculated surplus income, so because your partner is not bankrupt they are not required to pay anything.

    The trustee is appointed by the court to ensure that bankruptcy process is fair to all parties. The trustee should therefore be explaining the process to you so you fully understand your obligations.

    The trustee is paid based on the funds that are in your estate, so you are correct; if you pay more, the trustee will get paid more. However, the surplus income rules are set by the government, so the trustee is simply following the rules by advising you what you are required to pay. I have two suggestions for you:

    First, call your trustee and ask for an appointment to have the trustee fully explain how surplus income works in your case. Because this is your second bankruptcy you will be automatically bankrupt for two years (or three years if you have surplus income), so it is very important that you understand the process. The only way your trustee will know if you have surplus income is if you are sending them budgets with your paystubs each month. They should review them each month and advise you if you are over your limit. The sooner you know what’s going on, the better.

    Second, if after this meeting you are unsure about the trustee, you can talk to the Office of the Superintendent of Bankruptcy, who regulates all trustees. You can contact them at this link: http://dld.bz/dpSTe and they can answer your questions, and intervene with the trustee if required.

    Reply
    1. Christene

      Thank you for your response Mr. Hoyes. I have been supplying my trustee with budgets every month since January of 2013. These included the income and expenses of my partner. So for example: in March I made $1790 and my partner made $3700 the non-discretionary for the month was $1500. How much would my surplus income be?

      Reply
  3. J. Douglas Hoyes, Trustee Post author

    Hi Christene. The answer depends on the size of your family, and whether or not the non-discretionary expenses were for you or your partner.
    If you are a family of 2 (i.e. no dependents) and all of the non-discretionary expenses belong to your spouse, in March 2014 you would be required to pay $332 for the month in surplus income.
    I would suggest you request a meeting with your trustee and have them explain this calculation to you, since I don’t have access to all of your paperwork, and they are in the best position to explain the calculation.

    Reply
  4. Tamara

    I have twins aged 12 and a 20 year old that still lives at home who does not work but is looking at going back to school to get his high school diploma. He is financially dependent on me but because he is of age am I able to claim him as part of my family size? I am looking at surplus because I can barely afford to live let alone having to pay a trustee with money that I need to pay my rent with and support my kids with.

    Thanks,

    Reply
    1. J. Douglas Hoyes, Trustee Post author

      Hi Tamara. A dependent child would be included in your family size for the determination of surplus income. If a 20 year old child was in school full time and you were supporting them, they would generally be considered to be a dependent.

      Reply
      1. Bev

        Hi. I entered a bankruptcy making minimum wage. I now have an better paying job. I was paying a 100 a month for 24 months. They now want 400 a month for 36 months. How can this be?

        Reply
        1. J. Douglas Hoyes, Trustee Post author

          Hi Bev. The amount you are required to pay in a bankruptcy is based on your monthly income. Each month you send the trustee a copy of your paystubs, and they calculate the amount owing. If your income increases significantly during the bankruptcy, the payments required may also increase.

          If your bankruptcy was originally for 24 months that would imply that this is your second bankruptcy. Without surplus income a second bankruptcy lasts for 24 months, but with surplus income it is extended to 36 months.

          Your trustee can explain in more detail. Your only option would be to file a consumer proposal, which would end the bankruptcy if accepted by your creditors. Again, your trustee can explain whether or not that is a viable option, or you could consult a different licensed insolvency trustee.

          Reply
  5. Dennis

    I’m weighing options as of now. I’m going through a seperation and she’s walking away from our house and all debts. I’ll be paying 1200/ month to child support out of the 3700/month I bring in after taxes. If I were to go bankrupt, would the courts take into account the child support? 3700-1200=2500. Would they take 3700 or 2500 for a single person’s income?

    Reply

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