When you file for bankruptcy, at the initial filing, your financial situation is evaluated by your Bankruptcy Trustee to determine the cost of your bankruptcy. In addition to the administrative costs there is a surplus income guideline that is set by the Superintendent of Bankruptcy. If you’re household income is over a pre-determined amount each month, you pay a portion of your earnings over that limit.
It is important to note that if your household income fluctuates, then your surplus income payments can change month to month.
Assuming your income is over the base threshold (the amount the government says you can keep) the more money you earn, the more you are required to pay.
When you file for bankruptcy, you and your trustee will do a preliminary estimate to find out whether or not you have to pay surplus income and if so how much those payments might be. If your income is always the same, then the trustee can calculate your income and fairly accurately calculate your monthly payments. This helps you manage your cash flow better because you will know what payments you need to make every month.
Your net household income will be monitored each month during the bankruptcy process, so if your income has changed then the amount you should have been paying and the length of your bankruptcy could change as well. If there is a change in either your total income, personal or family situation, notify your bankruptcy trustee right away. Your monthly payment can be adjusted during the administration of your bankruptcy so there are no unhappy surprises prior to your discharge.
You or your bankruptcy trustee can request a meeting to keep the required payments on track. Making all of the requirement payments in a bankruptcy, including your surplus income payments, is required before your receive your discharge from bankruptcy. Failing to make the required surplus payments means your discharge will be delayed and the bankruptcy period extended.
If your income fluctuates and you would like to look at a fixed payment each month, then you may want to file a consumer proposal. A consumer proposal is a set payment plan to the creditors and does not change once approved by your creditors.