Bankruptcy and Surplus Income Calculation For A Family

Understanding How to Calculate Surplus Income Bankruptcy Payments for a Family

Bankruptcy is a difficult and often confusing process. When a person or family is declared bankrupt, it can be challenging to navigate through the various calculations involved, including the surplus income calculation. This article aims to shed light on this complex process, especially concerning families.

What is Surplus Income?

Surplus income is the amount of income that exceeds the government-established threshold. This threshold varies according to the size of the family. The larger the family, the higher the threshold. The government acknowledges that maintaining a family incurs more costs than a single person, hence the difference in thresholds.

Example: in 2023, the surplus income threshold for a single person was $2,543, whereas for a family of four (two adults and two children), it was $4,725.

Who is Considered Part of Your Household?

When determining family size for the calculation of surplus income, it’s not just about the number of individuals living under your roof. If you have children studying away from home, but you are still financially supporting them, they may be counted as part of your household.

The same goes for parents who are living with you and are dependent on your income. Therefore, your family size could be larger than you think.

How is Household Income Calculated?

The surplus income calculation considers the total household income. This includes the income of everyone in the house. Therefore, your spouse and any other family members earning money will need to disclose their personal income as part of the bankruptcy process.

What Deductions are Permitted?

Certain deductions are allowed in the surplus income calculation, based on the total household. These deductions are important to know and consider when determining the surplus income amount.

Surplus Income Payment

While the surplus income calculation is based on the family size, income, and expenses, you are only required to pay your share of your household’s surplus income amount.

Seeking Professional Advice

Given the complicated nature of the surplus income calculation process, it’s recommended to seek professional help. A bankruptcy trustee can guide you through your family finances and provide you with alternatives that might be more suitable for your situation.

Tip: Initiate a discussion with your bankruptcy trustee before filing for bankruptcy.


Bankruptcy and surplus income calculation for a family is a complex process that requires careful consideration and understanding. It’s crucial to seek professional advice to ensure you make the best decisions for your financial future. It’s also essential to understand that you’re not alone in this process, and there are resources available to help you navigate through this challenging time.

Remember, bankruptcy is not the end of the world. It’s a legal tool designed to provide relief to those who are overwhelmed by debt. By understanding how the process works, including how surplus income is calculated, you can navigate this difficult time with more confidence and less stress.

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