What You Need To Know About Surplus Income Limits

Did you know that when you file for a bankruptcy, it’s not just your assets that you may have to sell? In addition to having to sell assets like second properties, investments outside of retirement savings, or equity in vehicles over $6,600, you could also wind up paying money due to surplus income.

Surplus Income in a Bankruptcy in Etobicoke

It’s important to know that the bankruptcy process is far from instant. You probably know that bankruptcy will remain on your credit history for six to seven years from the date of your discharge (the first time), but bankruptcy itself also takes nine months and one day until you are discharged.

However, if during those nine months your average monthly income exceeds the surplus income limit, this will result in an extension to the time you are in bankruptcy and further payments that you need to make to your bankruptcy trustee, now called a Licensed Insolvency Trustee, to be distributed to your creditors.

Surplus income limits change annually to reflect inflation and they are different depending on the size of your household. These are the monthly surplus income limits for 2018:

Number of Household Members                Surplus Income Limit

1                                                                                       $2,152

2                                                                                       $2,679

3                                                                                       $3,923

4                                                                                       $3,998

5                                                                                       $4,535

6                                                                                       $5,114

7                                                                                       $5,694

How Surplus Income Works in Bankruptcy

Going over the surplus income limit does not mean you have to hand over everything. Your income over your surplus income limit is charged at a rate of 50 percent, so you pay half of your surplus income to your bankruptcy trustee. The bankruptcy trustee at David Sklar & Associates disburses that income to your creditors, much like your assets. Your surplus income is calculated after tax.

Bankruptcy in Etobicoke

All in all, bankruptcy in Etobicoke should help you get back on your feet. Bankruptcy is meant to be a reformative measure, not punitive. You can rebuild your credit and even qualify for a mortgage down the line if you’re smart about using credit. Your spouse’s credit won’t be affected and your job will not be affected in most cases. In fact, there’s no reason for your employer to even find out unless there is a garnish on your wages.

Bankruptcy can be a valuable way to get out of debt. But there are also alternative options to bankruptcy that are easier to manage and have a smaller impact on your finances. The most popular of these is a consumer proposal. Your bankruptcy trustee at David Sklar & Associates can help you decide between a consumer proposal and filing for bankruptcy in Etobicoke. The choice is yours; we help you figure out the best way forward.

When you come into David Sklar Etobicoke, they will discuss your options with you, including alternatives. They will also answer any questions you have such as questions regarding surplus income. The first step toward becoming debt free is a call to a bankruptcy trustee.

Take Your First Step Towards A Debt Free Life

If you are overwhelmed by debt and live in the Toronto area, call us at 416-498-9200 to book a FREE, confidential appointment. We will review your financial situation in detail and discuss all of your options with you. Alternatively, you can fill out the form below and our team will reach out to you. 

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The best decision I've made was to contact David Sklar & Associates, they are experts in this matters and also have dedicated Licensed Counsellors that provide the best customer support, like Rhoda Lewis, who I highly recommend. She worked tirelessly on my case, explaining ever detail to me willingly. She demonstrates a true interest in her clients. I appreciate how she patiently walked me through what to do, step by step. I now have control over my finances, as a result my life is much more peaceful and I can focus on what matters. Thank you!
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Rhoda is a wonderful person, She help me and guided me throughout the process. I couldn’t do it without her support and expertise. Now I can start fresh and full of hope of a better life ahead of me.
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The service I recieved from David Sklar and Associates was great. I was able to meet with Christin Sylver. She is kind, understanding and, professional. She was able to answer all the quesions that I had regarding my debt. At the end of our meetings, I felt that there is a heavy burden lifted from my shoulders. I recommend Chistine to anyone who is looking into debt relief.
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Jerry is a very patient person, he answered all my questions and made this experience so smooth and easy for me. I was not sure what to expect but dealing with him made me feel so much better. He sure knows what he is doing and how to put people at ease for sure (should have done this long ago). I recommend him to anyone I am so glad I had him on my side and now to do my part. Thanks Jerry ur greatPattie
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