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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