Bankruptcy Kitchener Blog by Scott Schaefer

When someone files for personal bankruptcy, the amount they have to pay depends on the number of people in the family unit and how much income the family makes. This is called “surplus income”. The concept of surplus income can be relatively confusing, so let me try to explain it generally.

The government sets a threshold amount. This amount represents the level of income an individual can make before having to pay extra into their bankruptcy. That is, if you have more income, then some amount should be paid to the creditors.

The surplus threshold is based on net income or take-home pay. Each year, the government adjusts the amounts. The thresholds for 2009 are:

Family Size – Monthly Threshold
1 – $1,870
2 – $2,328
3 – $2,862
4 – $3,474
5 – $3,941
6 – $4,444
7 or more – $4,948

Any amount an individual makes above these thresholds represents surplus income and as a result an individual must pay 50% of that number into a personal bankruptcy. For example, if a single person brings home $2270 per month, they would have $400 of surplus income of which they would have to pay $200 extra into their bankruptcy. The amount of surplus income decides the length of the bankruptcy. If the surplus income is on average is $200 or more, the bankruptcy will go for 21 months (9 months if less than $200). To see the directive from the government, follow this link.

For individuals that would expect to have a higher amount of surplus during their bankruptcy, a consumer proposal is an alternative plan to deal with debts through one manageable monthly payment.

If you are from Kitchener Waterloo area and are considering your options in dealing with your debts, I suggest that you call our Kitchener office at 310-PLAN or 519-747-0660 or e-mail me. We will review your options in detail and explain the concept of surplus income further. We can make a plan for your situation so that you can get a fresh financial start.

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