How To Calculate Payments in a Bankruptcy in Canada

Calculating Bankruptcy Payments

When you calculate the cost of bankruptcy, it is critical to understand all the nuances associated with the process.

Individual to every situation, each bankruptcy process is different.

The associated cost is determined by the size of their family, overall assets, expenses, and income on a monthly basis.

The three different approaches to payment during bankruptcy include:

 

  1. Monthly arrangements: This covers your administrative fees, meaning the cost of your counselling and any payments to the government.
    It encompasses your Trustees payment, costs of correspondence, tax preparation, and other clerical issues.
    Usually this is in the range of $200 every month for every bankrupt individual.
  2. Surplus Income costs: Determined by your net income less any essential expenses and payments according to the Directive of the Superintendent, this amount is different for everyone.
    It is calculated according to the number of dependents you have, including your kids and spouse (provided the children are minors).
    Any non-discretionary costs deal in matters such as child support or spousal support, expenses for childcare, those associated with medical arrangements or legal fines.
    The amount of people in the household dictate the standard amount for surplus income.
  3. Issues relating to assets: Of course, certain assets are surrendered  to your trustee in exchange for debt elimination.
    However, you can also keep these assets through an arrangement to purchase them back from the estate.
    The amount owing for these assets relates directly to their value – the amount your trustee recovers were they able to retail the asset – as well as what assets are seizure-exempt.
    These exemptions vary based on your province and may include:
  • Home equity – the value of your home which is paid and legally yours.
  • Value of your vehicle without loans according to the provincial limitations.
  • Investment arrangements such as savings bonds.
  • Refunded taxes for years where you didn’t file your taxes and for the year of your bankruptcy.
  • Contributions to retirement savings accounts made over the preceding twelve months.

 

According to these costs, there are some key inquiries you ought to go through with your Licensed Insolvency Trustee before you file for bankruptcy.

These include:

 

  1. What your payments are likely to be.
  2. Any associated risks for surplus income payments.
  3. Options available to you related to things like consumer proposals.
  4. Asset arrangements and whether you would be able to keep them with a consumer proposal.

 

By asking ahead of time, you can make a fully-informed financial decision.

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