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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Ready to live debt free?

I cannot emphasize enough how thankful I am for Jackie Stanley's help with filing for bankruptcy.All of us dread being put in this position and we have a million questions about the process but trust me Jackie makes it so easy for you that you don't have to do anything yourself!She is very kind and friendly and puts you at ease right away. She emphasizes with you and let's you know it's not your fault.Most importantly when you leave that first meeting you will not believe the load that is taken off your shoulders. You can actually feel it!You are a godsend Jackie and I can't thank you enough!!I hope you are highly valued there as much as you are by me!
Sue Murray
18:45 05 Dec 21
Putting together and executing a Consumer Proposal can be daunting, that is unless you work with Cori Naron at David Sklar & Associates Inc. Cori's advice and support has been instrumental over the past five years. Thank you Cori!!
Barry Kuntz
20:37 01 Dec 21
I’m very happy with the services I received for Jackie Stanley who helped me get my finances in order. It was a quick and easy process & all of my questions were answered.
Amanda Frappier
01:18 19 Nov 21
I have had the privilege of being supported by Jackie at David Sklar Associate. She was very helpful, very professional and very friendly. She gave me the help I need. Thank you Jackie for your help.
Alex Taylor
22:03 17 Nov 21
Got my probe solved, great service
arny raposo
17:02 11 Nov 21
Jackie at Daivid Sklar and Associates is such a pleasure to work with. She explained everything in great detail and is always there when I have a question or concern. She really cares about her clients.
Steve Medica
09:33 10 Nov 21
I filed a proposal with another group, which came in as a referral from one of my brokers. My experience went from ok to bad to worse, due to lack of communication and education on the process I was to embark on. I worked with Cori Naron in the past, and I came to her now for help on literally doing the work that the other group should have done. Cori stepped in, educated me, advised on rights, responsibilities, how the process works and what potential outcomes may happen. I do not have enough words of recognition and gratitude for what she did - she alleviated stress, anxiety, dead-end thoughts and she made me live again. Congrats to DSklar for hiring her and retaining such talent.
Giani Kokolakis
18:45 25 Oct 21
Very professional service. Before contacting David Sklar & Associates i contacted bunch of other firms they seemed fishy. After I spoke with Jason Sklar at Hamilton Office I discovered professionalism with hope. I was explained every step of my situation with solution professionally. Thank you David Sklar & Associates.
Wajay Awan
07:29 12 Oct 21
I met David a few months ago and i am glad I did. He has helped me all the way through my bankruptcy with good advice and explained every step of the process. David is a very down to earth and very professional. Anytime I've had a question I was able to reach out to David by phone or email and he always got back to me. If your struggling with your bills and need a way to get help, I strongly recommend David Sklar &Associates to help you. My experience with them on 1-5scale would be a 5;; My life is so much better now, thanks to David Sklar.
Bruce Locke
16:13 08 Oct 21
I have had the privilege of being supported by Jackie S, at David Sklar n Associate.She was helpful, professional and friendly. I was able to get the help I needed at a difficult time in my life. I would recommend anyone who needs support with working out their debts to ask for Jackie, she will be waiting to assist however she can to help you through your debts. She works with a team who is always ready and responsive.Thank you Jackie and your team:)
Denise Simpson
15:17 09 Sep 21
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