10 Questions About Surplus Income

Surplus Income FAQs

Have you ever had a burning question about surplus income and how it works?

This post will help you find out everything you need to know about this often tricky and confusing subject.

What Is Surplus Income?

If you file for bankruptcy, you must make contributions to your past debts from your surplus income – the additional earnings you earn above the Superintendent’s Standards.

Current rules state that you have to pay 50 percent of your income above that limit to the bankruptcy.

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How Long Do Surplus Income Payments Last?

It depends on how many bankruptcy filings you have made.


  • First bankruptcy. If this is your first bankruptcy, then the court will order you to make surplus income payments to your creditors for 21 months;
  • Second bankruptcy. Creditors can demand that you make surplus income payments for 36 months;
  • Third bankruptcy or more. Here you pay debts from surplus income for at least 36 months. A court will decide the final duration of repayments.


Does Surplus Income Include Taxes?

The surplus income threshold applies to your after-tax income.

Does Surplus Income Include Living Expenses?

Medical expenses, child care, and child support are all factored into the surplus income calculation.

Other general living expenses, like car repayments and rent, are not.

How Do The Courts Determine How Much I Need To Pay?

The amount that you pay depends on your total income, the surplus income limit for your family size, and your qualifying costs and expenses.

Let’s suppose you’re a single person and you owe outstanding debts.

Your income is $3,000 per month.

The surplus income limit for 2019 is $2,203, so your surplus income is $797 per month.

If the rate you have to pay to the bankruptcy is 50 percent, you will pay $398.50 per month to your creditors.

How Do Fluctuating Earnings Affect Surplus Income?

Your surplus income depends on your average wage over six months for your first bankruptcy, and twelve months for your second.

So, if you earn overtime in one month, but not another, it will contribute to your overall surplus income across the six months, not just that month in particular.

Can I Refuse To Pay?

You can’t refuse to pay outright.

You can, however, request that your trustee mediates with the Office of the Superintendent of Bankruptcy.

Can I Avoid Paying Surplus Income?

Surplus income rules only apply to bankruptcy.

You may, therefore, want to consider filing a consumer proposal instead.

Can I Refuse To Pay After Mediation?

If you refuse to pay after mediation, then you will have to make your case in bankruptcy court.

Do I Have To Declare My Spouse’s Income?

The surplus income limits apply to the family unit as a whole, not the individual.

So if you live with a spouse, the bankruptcy court will ask them to declare their income too.

If they refuse to do so, then the court will cut your income limit by 50 percent.

If you have more questions, you should speak with a bankruptcy expert.

They can advise you on the best course of action to protect your finances.

Canadian Bankruptcies

How to File for Bankruptcy
What is Bankruptcy?
Bankruptcy FAQs
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?

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