Surplus Income is one of the main determining factors on how long a bankruptcy lasts for Canadians.

Determining how long a bankruptcy lasts for the average Canadian requires assessing several key indicating factors.

1. First time bankruptcy

  • 9 months  automatic discharge for 1st. time bankrupts who fulfill all their duties and who do not have surplus income average exceeding $200.00 determined at the 8th month.
  • 21  months discharge for 1st. time bankrupts who fulfill all their duties and who have average surplus income in excess of $200.00 determined at the 8th month.

2. Second Bankruptcy

  • 24 months  automatic discharge for 1st. time bankrupts who fulfill all their duties and who do not have surplus income average exceeding $200.00 determined at the 8th month.
  • 36  months discharge for 1st. time bankrupts who fulfill all their duties and who have average surplus income in excess of $200.00 determined at the 8th month.

3. Amount of Surplus Income

  • Surplus income is determined by the Superintendent of Bankruptcy, it is the difference between the amount of take home or net pay per month and your allowable, threshold expenses.  The threshold expenses are predetermined by the region you live and how many people are dependant on your income.  The Bankruptcy & Insolvency Act clearly  sets out how to calculate the required payment and the amount of surplus income.
  •  A trustee must follow the guidelines set out by the BIA, Bankruptcy Insolvency Act.   Trustees in Bankruptcy will be able to guide you to determine what your surplus income will be and how that will determine the length of your bankruptcy.

4. Amount of Tax Debt or your outstanding balance with Revenue Canada.

  • A person owing more than $200,000.00 of tax debt to CRA, Revenue Canada in which that $200k represents 75% of the total unsecured debt.  That bankrupt is then required to go to court to be discharged, this is completed through an adjudication.

 

Being discharged from bankruptcy requires obligations from the debtor be met, including mandatory 2 counselling sessions performed by the trustee or designate. Also, if the required payments are not fulfilled, you will  NOT be discharged from bankruptcy.