Surplus Income During Bankruptcy

What to Expect

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If you have extra cash after your bankruptcy period in Canada, you’ll need to increase payments to your trustee. The government sets a standard based on your income to determine what counts as surplus income. Missing these extra payments can prolong your bankruptcy beyond the usual nine to twenty-one months.

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Question

What happens if I have surplus income at the end of bankruptcy? I want to know what I need to do if I still owe surplus income when my bankruptcy period ends.

From: Anonymous, British Columbia (BC)

Answer

If you find yourself with some extra cash at the end of your bankruptcy period in Canada, you’ll need to step up your contributions to your trustee. This means making additional payments beyond what you were originally paying. The government sets a standard based on your income level to determine what counts as surplus income, aiming to ensure you pay your fair share towards debt repayment. This threshold varies based on family size and where you live. If you miss out on reporting or making these extra payments, your bankruptcy might drag on longer than the usual nine to twenty-one months.

From: Insider Scott

OSB Based Answer

If you have surplus income at the end of your bankruptcy, you need to continue making payments until the surplus income requirement is met. Under the Bankruptcy and Insolvency Act, section 68(1), if your income exceeds the monthly threshold set by the Superintendent of Bankruptcy, you must pay a portion of your surplus income to your trustee. This obligation remains until the total surplus income required is paid or the bankruptcy period concludes.

If there are still surplus income payments owed when your bankruptcy period ends, it will not discharge your overall debt obligations. You must fulfill these payments as outlined in section 68(3) of the Act, which states that any remaining surplus income must still be paid even after the discharge from bankruptcy is granted. Therefore, ensure you track your surplus income contributions until fully paid, as per the regulations outlined.

From: This answer is provided by scanning the OSB Bankruptcy & Insolvency Act and related directives

References

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