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 2023, based on family size:
The bankruptcy surplus income limits for 2023 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 $3,565 after tax each month, you are $400 over the limit for a family of two of $3,165, 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.
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.
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.
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?
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.
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.
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.
Are surplus income payments deductible for income tax purposes.
Hi Ella. No, only payments used to earn income are deductible for income tax purposes, so since surplus income payments are not payments used to earn income, they will not be deductible for tax purposes.
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?
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.
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?
Hi Dennis. Yes, the surplus income takes into account the support payments you are paying. Your best option is to have a licensed insolvency trustee review the calculations with you so that you know what you will be expected to pay in your bankruptcy.
I have gone bankrupt for the first time and there is two in our home myself and my partner I make less than 2000.00 per month and I don’t know what my partner makes but I’m reporting his T4. They are saying my amount is 2640 divided by 2 so I’m only allowed to make 1320. Per month and they said I have to be bankrupt for 21 months I pay them 186.50 per month this doesn’t seem right.. I thought I was allowed to make 2640 as my limit and I should only be bankrupt for 9 months for first time bankruptcy please confirm.
The surplus income limits are based on the size of your family. If the non-bankrupt spouse does not disclose their income, the surplus income limit is cut in half, which appears to be the situation you are describing. I would suggest that, if you have proof of your spouse’s income, you meet with your trustee to review their income so that a more accurate calculation of surplus income can be made, which may reduce the amount you are required to contribute.
I filed for bankruptcy in 2009. At that time the real estate I owned was worth less then the mortgage. The trustee required surplus payments $1,000 over 9 months . Sine then the property is worth more and the trustee sized and sold it for $500,000. The Trustee also now has garnished my wages. . I owed creditors $250,000. The trustee claims interest on the debit at 5% plus his fees plus the initial debt add up to k$600,000. The interest amount owing is increasing faster at 5% than I am able to pay. The Trustee never provided a discharge, which is why he was able to seize the property 10 years after the bankruptcy. so I cannot re-file. Can you suggest any way out of this perpetual increase ?
I am sorry, but you need to speak to the Office of the Superintendent of Bankruptcy if you have concerns with how your bankruptcy file was administered. Or speak to a lawyer if you think you have grounds for a lawsuit. I can think of reasons why the trustee may have done what they have done – and I can think of reaosns why perhaps they shouldn’t have. Without all of the detials I’m not in a position to comment further.
Since the term surplus income and it’s totally unrealistic and out of touch with modern reality arbitrarily assessed threshold…what happens if I earn as most people do much more than the unrealistic threshold of $2,248 as a single person to live on and my monthly cost of living far exceeds this unrealistic threshold therefore leaving me in actuality with no surplus income to give regardless of what the insane government threshold says is surplus income…then what happens to my bankruptcy petition…I mean if all of your income is still consumed just by cost of living alone regardless of unpaid creditors than making surplus payments would be impossible right?! Like really how stupid is our government to use the term surplus income against those petitioning for bankruptcy…these two idea are contradictory to each other…other wise if we all had surplus income why in the hell would we be petitioning for bankruptcy in the first place…the whole notion of surplus income in an insolvency petition is ludicrous contradiction of reality!!!
The surplus income thresholds are the same everywhere in Canada, which is somewhat unrealistic given that the cost of living is different in a big city and a smaller town. That’s why most Canadians choose to file a consumer proposal to make a deal with their creditors and avoid the surplus income penalty.
We declared bankruptcy in March 2022 for around $130,000.00 we were paying $200.00 monthly. In October we got a paper for the court saying we owes $6,000.00 in surplus up to August. We knew we might get charged a little surplus but this is ridiculous. We are in Newfoundland and our income was around $3,600.00 and we are still struggling with rent at $1.000.00 plus land taxes at $136.10 bankruptcy at $200.00. We had to put in a wood stove because oil was $700.00 monthly. God forbid we should get a flat tire. Anyway we never knew how far in depth we were getting until 8, months after claiming for bankruptcy. The surplus is crazy, I found out if I took $10,000.00 out of my pension to do the shingles the bankruptcy would take half so it would have cost me $20,000.00 to shingle my roof. So my daughter paid for it. We barely get by with inflation on a high time in this age. In Ontario rent is $2,000.00 and more and no one is adjusting the home income allowed per family. $200.00 we pay the bankruptcy is only being paid towards the car so apparently we didn’t pay anything on the surplus. We can’t see it any other way but they avoided telling us anything so the surplus would grow and they would make more money or they would have told us how much the surplus was growing each Month. My review was much less on the surplus and I can’t see it any different than a mafia style scam. My advice to anyone claiming bankruptcy, if you make more money than the minimum amount of living income is allowed (Don’t Do It).
Please give me your honest opinion.
Hi Philip. We are based in Ontario, so I can’t comment on the provincial exemption limits and other factors specific to Newfoundland. You are correct that the surplus income limits do not always fairly reflect a person’s living circumstances, which is why it is essential to work with a licensed insolvency trustee who explains your options, and explains how surplus is calculated, and keeps you informed each month as to how much you owe. For people with significant surplus income, a consumer proposal is often a better option. I suggest you contact your trustee and have them give you a full explanation.
I am thinking about doing a first bankruptcy
And I don’t like talking over the phone
I am more of a hands on and face to face person
How would I go about making appointment
Hi Will. All of our trustees offer in person appointments. You can call in, or fill out the form on the website and the trustee’s office will contact you to book an appointment. Here’s the link: https://bankruptcy-ontario.org/ontario-bankruptcy-trustee/