The minimum cost of a bankruptcy $1,800. You will pay your trustee $200 a month over the 9 month period for a first time bankruptcy.
The fees a Trustee charges are set by Ottawa, so you will pay the same regardless of the trustee you decide to work with.
Three Types of Bankruptcy Costs in Canada
In Canada there are three main aspects of the cost of filing bankruptcy, depending on the type of bankruptcy you file.
The base cost of filing bankruptcy: When you go bankrupt in Canada you will be required by your bankruptcy trustee to make a base contribution to your bankruptcy estate every month, which is generally $200 a month for 9 months (for a total of $1,800, which is the minimum cost of bankruptcy in Canada).
Surplus Income Costs: In some bankruptcies you will have income over a threshold set by the government and in this case the cost of your bankruptcy will increase because a bankrupt with excess income must pay a portion of the excess income to the trustee, who will then distribute the monies amongst the creditors in the bankruptcy.
These payments are known as surplus income payments. If you are required to make surplus income payment your bankruptcy will cost more and you will be bankrupt for longer.
It will be necessary for you to make surplus income payments if the average income you make during the first 7 months you are bankrupt is $200 or more over the limit set by the Canadian government depending on the size of your family unit.
Debtors who will have significant surplus income payments might want to consider a consumer proposal as a bankruptcy alternative.
Assets You Must Surrender to Your Trustee: While not an actual cost you must pay, the cost of your bankruptcy could rise significantly if you have lots of assets that you must surrender to your trustee because those assets are not protected under the bankruptcy exemptions in the province in which you live or you cannot afford to “buyback” the equity in the assets.
Assets that you lose in a bankruptcy include your tax refunds for the year you filed bankruptcy and any tax refunds you are owed that you haven’t yet received. You could also lose your home, car, investments and contributions you made to your RRSP in the 12 months prior to filing bankruptcy, depending on your province of residence. Please refer to your province or territory’s bankruptcy exemptions.
How Your Circumstances Impact the Bankruptcy Cost
If you have income that is over the limit set by legislature you will be required to pay surplus income payments which is impacted by your family size and your income.
Other Bankruptcy Costs
If you receive a “windfall” during your bankruptcy you will be required to turn over these monies to your trustee as well. “Windfalls” are money or assets you receive through luck such as lottery winnings or money you inherit.
With all of the different ways your circumstances impact the bankruptcy cost in Canada you need to see a professional bankruptcy trustee to determine the exact costs of bankruptcy in your case.
How Can I File Bankruptcy if I Can’t Afford the Fees?
If you cannot afford the bankruptcy cost you might be what is known as “judgement proof”. Judgement proof refers to the fact that if you are sued you have no assets that the creditor can seize.
I was too once scared to file bankruptcy but reluctantly did in June 2010 and was discharged in April 2011. Since then I have received a car loan and multiple credit cards. In 2013 I will be applying for a mortgage and I feel confident that I will be approved..