Bankruptcy Kitchener Blog by Scott Schaefer

In a personal bankruptcy, the amount someone has to pay to the bankruptcy trustee depends on how much take home pay the person and their family unit receives. When a person’s income is above the government limit, this is referred to as surplus income. 50% of the amount over this limit must be paid to the trustee. The overall concept is that the creditors are to be paid back a portion of the debt based on the net income received during the personal bankruptcy. This surplus income concept can be relatively complex as each family unit’s income varies on a case by case basis; especially considering the range of income levels in Kitchener Waterloo.

The government released the new 2010 limits or threshold yesterday, they are now:

Family Size – Limit
1 person -$1,884
2 people – $2,345
3 people – $2,883
4 people – $3,501
5 people – $3,971
6 people – $4,478
7 or more people – $4,986

The amount of surplus income received during the bankruptcy impacts if the bankruptcy will last 9 or 21 months (24 or 36 months if it’s a second time bankruptcy). The surplus is averaged and is reviewed prior to making this discharge decision.

If surplus income is expected to be a factor for someone in financial hardship, then a consumer proposal is an alternative to personal bankruptcy. A consumer proposal fixes a monthly amount that someone has to pay each month as compared to a personal bankruptcy were the amount changes each month based on income.

If you are from Kitchener-Waterloo area and want to better understand how a personal bankruptcy with surplus income or a consumer proposal would help deal with your debts, call me at 310-PLAN or send me an e-mail. We have free consultations in out Kitchener office to sit down and review your situation and gain an understanding of the pros and cons to the options in your situation.

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Statistics Canada released the bankruptcy and consumer proposal rates today and Kitchener Waterloo was hit harder than the Ontario and Canadian averages. 2009 was a year marked by the recession, the downturn in the automotive sector and financial crisis. These all contributed to individuals falling on tough financial times.

In 2009, 151,712 individuals filed a consumer proposal or bankruptcy in Canada. This was an increase of 31.0% over the 2008 number of 115,789. For Kitchener Waterloo, the increase in personal bankruptcies and consumer proposals was 39.2% which was higher than the Canadian increase of 31.0% and the Ontario increase of 32.7%. The numbers with respect to just personal bankruptcies in Kitchener are even more drastic – Kitchener bankruptcies saw a 45.9% increase as compared to Ontario of 28.5% and Canada 28.4%.

For my Kitchener office, we met with many people from Kitchener Waterloo and as such personally understand how hard this year was on them as they saw the impact of the recession on them and their families.

In the past, Kitchener Waterloo may have fared better due to our diverse economy with the high tech sector, universities and college, hospitals, insurance, and manufacturing sectors, but 2009 had a deeper impact that spread to all areas and sectors.

Kitchener Waterloo is rebounding, but individuals are still feeling the long lasting impacts that 2009 brought to their situation and with increased debt levels, individuals still will need the assistance to get a fresh start through a consumer proposal or bankruptcy.

If you would like a free review your situation to make a plan to deal with your debts, call our Kitchener office at 310-PLAN or send me an e-mail.

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