In this consultation, they will sit and evaluate your finances and suggest a route to take.
If bankruptcy is then the way forward, they will talk you through the process (including how much it will cost you) before asking you to fill out the relevant forms.
The trustee then mails out your documents to your creditors.
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When you file for bankruptcy in Canada, there are three main different payments that you’ll have to cover throughout the process.
Although, of course, the overall costs for it differ person to person and will depend on expenses, assets you have and monthly income, you should expect to make these three payments:
- Selling your assets to help to eliminate the debt.
- Monthly contributions – this covers all of the costs associated with it, such as your trustee’s fees, administrative costs, etc.
- Surplus income payments – the amount of surplus you have each month can be worked out using the following formula:
Net income – non-discretionary expenses (e.g child care expenses or spousal support costs) – how much you have to give based on the size of your family.
The limits for surplus income are created each year by the Office of the Superintendent of Bankruptcy.
So it’s important to identify which limit aligns with your family size when working out how much surplus income you have to contribute.
If you’re over the household income guideline that’s set by the government, any additional income will have to be paid.
However, although it might initially seem simple to determine what your surplus income payments will be (i.e if your income stays the same each month), for many people these could fluctuate month-to-month.
Because naturally, expenses and income can change.
To help guide you in the right direction, we’ll take a further look into what to do if these change and how they are calculated throughout your bankruptcy.
When your income starts to increase, as will the monthly repayments you’re required to pay.
The moment there is an alteration in your income or something changes within your family that could affect this, it’s vital that you inform your trustee.
Although your total household income will be audited each month throughout the process, it’s still important to let your trustee know.
When this income changes, the length of your bankruptcy along with the amount you pay in terms of surplus income payments are likely to change.
As part of the process, your trustee may examine your average income to determine if this should happen.
From the start, of course, it’s a good idea to discuss with your trustee the prospect of keeping payments on track and adjusting the amount you pay if you expect to get a pay rise.
This way, you’ll be able to be discharged from bankruptcy efficiently.
If your income increases and you don’t inform them, then there will be a delay in this process as you won’t have been meeting the required surplus income payments.
An alternative to altering the payments if your income increases is to file a consumer proposal.
An ideal solution if you’re looking to pay a fixed amount each month, it won’t fluctuate as your income changes.
Of course, with this option, your creditors must first agree to a payment plan created by you and your trustee.
But if they do agree to it, it can be an efficient way of repaying your debts without having to file for bankruptcy.
Get in Contact with a Licensed Insolvency Trustee Today
Do you want to find out more about whether your surplus income payments will change every month?
Then don’t hesitate to get in contact with one of Bankruptcy Canada’s partnered Licensed Insolvency Trustee today.
With over 400 across Canada, you’ll be able to find an expert in the industry that can guide you in the right direction.
Simply call (877) 879-4770 or email them today.
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