Last week, we explained the process of how someone would go about claiming bankruptcy in Ontario. One of the frequent questions we get when talking to people about whether a personal bankruptcy or consumer proposal is the right option for them is “what is surplus income in a bankruptcy?”
The basic idea of surplus income is that if you earn more than the government sets out as the limit they believe you need to live, you will have to pay more back to your creditors while you are bankrupt (“The more you earn, the more you pay”). These limits are revised ever year by the Office of the Superintendant of Bankruptcy and will depend on how many members there are in your family. Some of the technical details about surplus income can be found here on our main website. The most important thing to remember about surplus income is that if you have to pay it, your bankruptcy can become very expensive, and it will mean that if it’s your first time, your bankruptcy will automatically be extended to 21 months (36 months if you have been bankrupt before).
Often when we are reviewing options with our clients and we realize that they will have to pay a lot of surplus income, the consumer proposal will start to make a lot more sense for them. Reading about the technical calculations of surplus income can be very overwhelming! If you’re trying to decide whether a personal bankruptcy or a consumer proposal is the better option for you, we always suggest that you give us a call.
You can come in and see us for a free no obligations consultation where we will review your situation, explain all your options to you, and help you get started on the plan that’s best for you. Give us a call at 310-DEBT or 1-866-747-0660 or email us to take the first step towards your fresh start today!