How Much Does it Cost to Declare Personal Bankruptcy?

Understanding the Financial Implications of Personal Bankruptcy

When it comes to financial struggles, the prospect of personal bankruptcy is a reality for many individuals. Thus, the question that often arises is: How much does it cost to declare personal bankruptcy? This article will guide you through the financial implications associated with filing for personal bankruptcy in a detailed, comprehensive manner.

What is Personal Bankruptcy?

Personal bankruptcy is a legal process that individuals undergo when they are unable to pay off their debts. It’s regulated by the federal law and involves a licensed insolvency trustee who oversees the process. It’s crucial to note that the cost of declaring bankruptcy is not determined by the amount you owe.

Role of a Licensed Insolvency Trustee

You don’t need to hire a lawyer to declare personal bankruptcy; a licensed insolvency trustee suffices. The trustee’s fees and the government filing fees are dictated by the Bankruptcy and Insolvency Act. These fees are not arbitrary; rather, they are stringently monitored by the federal government.

Initial Consultation

Before you begin the bankruptcy process, you need to consult with a licensed insolvency trustee. This consultation is typically free of charge, and no referral is needed. The trustee or a qualified insolvency estate manager will discuss your specific financial situation, your objectives, and explain all your legal debt options, including bankruptcy.

Determining the Cost of Bankruptcy

The cost of bankruptcy is not determined by the amount of debt you owe. Regardless of your total debt, the trustee’s fees remain the same. Most people retain their assets during bankruptcy, and the costs are paid directly by the person filing for bankruptcy.

Calculating the Bankruptcy Fee

The direct cost to the person filing for bankruptcy is typically around $2,300. This fee is usually paid over a period of nine months. This fee includes:

  • The filing fee to register the bankruptcy in Canada
  • Costs for two financial counselling sessions
  • Preparation and filing of related income tax returns
  • Ongoing support throughout the bankruptcy process

Surplus Income and Bankruptcy

Your monthly after-tax income is a significant factor that influences both how much you pay towards your bankruptcy and how long it takes before you are released from bankruptcy. If your household income (net of standard deductions and certain additional expenses) is above the government-set ‘superintendent’s standards’, you may be required to pay what is called ‘surplus income’.

Surplus Income – An Overview

There are several variables when it comes to surplus income. Certain expenses, like childcare and medical costs, can reduce the amount of surplus income you need to pay. Only 50% of surplus income (net income exceeding the superintendent guidelines) needs to be paid. If surplus income is payable, the bankruptcy period extends from nine months to 21 months, in the case of a first-time bankruptcy.

Considering Alternatives

Declaring personal bankruptcy is not the only solution to manage debts. Many people can pay off an affordable portion of their consolidated debts and have the unmanageable balances and interest forgiven by making a Consumer Proposal instead. A Consumer Proposal can be an effective alternative to personal bankruptcy.

Final Words

Understanding how much it costs to declare personal bankruptcy is crucial when considering this step. By understanding the cost, you can make an informed decision and choose the best course of action for your financial situation.


In conclusion, understanding how much it costs to declare personal bankruptcy is essential when considering this option. It’s important to consult with a licensed insolvency trustee to understand all your legal debt options.

However, bankruptcy isn’t the only solution. Many people can pay off an affordable portion of their consolidated debts and have the unmanageable balances and interest forgiven by making a Consumer Proposal instead.

Before making any decision, it’s crucial to get accurate information so you can make the best decision on how to move forward. With the right guidance and support, a financial fresh start is possible.

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