Cost of an Ontario Bankruptcy

How much will an Ontario bankruptcy cost?

The exact cost of filing a bankruptcy in Ontario varies, as it is based on your monthly income, expenses, family size and assets. Without knowing the specifics of your individual situation we cannot give you the exact costs. However, we can walk you through all the calculations that an Ontario Trustee uses, when determining the costs of a bankruptcy.

First, you need to understand the different types of costs associated with filing a bankruptcy in Ontario.

They are:

Monthly Contributions
Surplus income payments
Assets

Monthly contributions:

You are required to make a minimum contribution to your bankruptcy for each month that you are bankrupt. This contribution covers administrative costs such as: government fees, your trustee's time, mailing etc. You will typically be required to contribute up to $190 per month, although this cost may increase if there are unusual complexities in your situation.

Surplus income payments:

The general concept of a surplus income payment is "the more money you earn the more money you pay". The government has set net monthly income thresholds, for a person or a family, to maintain a reasonable standard of living in Canada. Every dollar that a bankrupt makes above this income threshold, is subject to a surplus income payment of 50%. Each month you will be required to send your trustee a copy of your paystub(s), so they can calculate your net income and determine if any surplus income payments are required, and if so how much they will be.

For more details read "Surplus Income Payments: How much do I have to pay in a bankuptcy in Ontario?"

Table: Income threshold by family size:

Family Size

Threshold

$1,926

$2,398

$2,948

$3,579

$4,059

$4,578

$5,097

Sample Calculation:

Single person earning:

$2,926

Income threshold is :

$1,926

Total above the threshold

$1,000

Owed: Surplus Income Payment is $500 (50%)

A first bankruptcy will last for a minimum period of nine months. If on average you are paying more than $100 per month in surplus income payments, then your bankruptcy will be extended for an additional 12 months. However, in the event that you are also paying child support, or have significant medical expenses, then your income will be reduced by these amounts, reducing your surplus income total.

Assets

The final "cost" of a bankruptcy is the assets that you lose when you go bankrupt. In order to be absolved of your debts you will need to surrender certain assets to your trustee.

Assets you will be required to surrender are:

Equity in your house;
The value of a car with no loans (over the $5,650 exemption limit);
Investments (like Canada Savings Bonds or other non-exempt assets);
Quarterly GST credits - These will be automatically forwarded to the trustee;
Tax refunds for prior years that you haven't yet filed and for the entire year that you are bankrupt;
Any RRSP contributions that you have made in the last year.

As you can see, the actual costs of an Ontario bankruptcy are somewhat complicated and vary by individual case. The only way to get an accurate answer on exactly how much an Ontario bankruptcy will cost, is to speak with a licensed bankruptcy trustee. At Hoyes Michalos & Associates we are happy to offer everyone an initial FREE, no obligation professional consultation. You can take advantage of this offer, either in person or online, through our confidential case evaluation tool. Let one of our experts review your situation and explain all of the different Ontario debt management options to you. We will help you determine if bankruptcy is indeed the correct solution and if so, outline exactly how much your individual bankruptcy will cost. You are not alone; at Hoyes Michalos & Associates we are confident that we can finally help you to successfully resolve your overwhelming debts. Simply contact us today!

Learn how much your Ontario Bankruptcy will cost

How much will an Ontario bankruptcy cost?

Monthly contributions:

Surplus income payments:

Assets