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Surplus Income

Surplus Income in Bankruptcy

After you have declared bankruptcy you may be required to make monthly payments, known as surplus income payments. The surplus income you have determines the length of your bankruptcy.

What is surplus income?

Surplus income is based on Office of the Superintendent of Bankruptcy guidelines. The amount depends on your income, and your family size and situation.

You must submit proof of your household income (including pay stubs, child tax benefits, and support payments) and some special expenses to your trustee every month, and your trustee will help you calculate the amount you must pay.  The amount depends on your percentage of the household’s income.

For example, for a two person household, the government income allowance is $2508.00 per month. Any monthly household income over this amount will be part of the surplus income calculations. At that point the person’s percentage of the household income is considered and any calculated amounts are to be paid to the trustee each month.

How much surplus income do I pay?

You must pay 50 per cent of your surplus income if your surplus income is over $200 per month. You pay this to your trustee, for distribution to your creditors.

How long do I make surplus income payments?

The duration of your surplus income payments depends on whether this is your first bankruptcy.

If this is your first bankruptcy and you are not required to pay surplus income you will probably be discharged from your bankruptcy in 9 months. However if surplus income payments are required then your bankruptcy is automatically extended and you must make payments and provide income information for 21 months.

If you have declared bankruptcy before and are required to pay surplus income payments this period is extended to 36 months for payments and then you would be discharged.

If you disagree about the amount or duration of payment, a person can request mediation or the court will make a decision on the required payments.

Keep in mind, the trustee simply receives your household income information and proof of certain expenses to make the calculation. The federal government provides the formula and the rules.

In addition, the trustee tracks your income from the beginning of your bankruptcy as long as surplus income payments are to be made. If your income changes, the payment will also change.

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