The Office of the Superintendent of Bankruptcy has announced the new surplus income limits for 2018 bankruptcy filings:
|Family Size||Income Threshold|
Numbers are nice, but what does this mean to you? Here’s the simple explanation:
If you declare bankruptcy, the more you earn, the more you pay. It’s that simple.
So, if you are a single parent with one child, you are a family of two, so your surplus income limit is $2,69 per month. If your net earnings (your income after tax, less child care and medical costs) are $3,079 per month, you are $400 over the limit, so you have $400 of surplus income.
If you are bankrupt you are required to pay half of your surplus income to your creditors, so in this example you would be making a surplus income payment of $200 per month.
If your income goes up, you pay more. If your income goes down, you pay less.
If you are considering bankruptcy, you should estimate your income during the bankruptcy period, so you can estimate your surplus income and therefore the cost of your bankruptcy. If you get a bonus, or work overtime at certain times during the year, or if you get laid off for part of the year those factors will influence your surplus income.
If you expect your income to increase and you are worried that you may pay a lot in surplus income, you could consider a consumer proposal as an alternative to bankruptcy. We negotiate a settlement with your creditors up front, so if your income increases later your payments don’t increase.