What is surplus income in a Canadian bankruptcy?
Surplus income is the amount your household net income exceeds the monthly threshold set each year by the Office of the Superintendent of Bankruptcy (OSB) under Directive No. 11R2. If your income is above the threshold for your family size, you must pay 50 percent of the excess to your bankruptcy estate for the benefit of creditors.
How much of my surplus income do I have to pay?
You pay 50 percent of the amount by which your average monthly net income exceeds the OSB threshold for your family size. For example, if you earn $1,000 per month over the threshold, your required payment is $500 per month.
Does surplus income extend my bankruptcy?
Yes. If you have surplus income during your bankruptcy, a first-time bankrupt's automatic discharge is delayed from 9 months to 21 months. A second-time bankrupt is delayed from 24 months to 36 months. The trustee reviews your income throughout the bankruptcy.
What counts as non-discretionary expenses?
Certain expenses can be deducted before calculating surplus income, including child care, spousal or child support payments, court-ordered fines, medical expenses, and certain employment-related expenses. A Licensed Insolvency Trustee determines what qualifies under OSB rules.