How Your Income Impacts Personal Bankruptcy Payments
If you’re looking for debt relief services, it’s important to examine all the options available to you.
Consumer proposals and bankruptcy are particularly popular options when it comes to resolving unmanageable debt.
However, there are many elements to insolvency, so you’ll want to find out exactly what’s involved.
Before you decide whether or not filing for bankruptcy is the right decision, take the time to go over the process and the consequences in detail.
One area that commonly causes confusion is how your income impacts personal bankruptcy payments.
Many people don’t realize that you are required to make payments until your bankruptcy is discharged or that your income affects how much you need to pay.
What are Bankruptcy Payments?
Before you file for bankruptcy, your licensed insolvency trustee will discuss your income with you and help you to gauge what your bankruptcy payments are likely to be.
These are payments you will need to make on a monthly basis until you are discharged from your bankruptcy.
The funds are distributed amongst your creditors to help pay off all or part of your outstanding debts.
By assessing how long it is likely to be until you are discharged from your bankruptcy, your trustee will determine what your average income is expected to be over this period.
Your essential expenditure, such as housing and food costs, will also be taken into account before a monthly bankruptcy payment is calculated.
Remember – bonuses are included when determining what your bankruptcy payment should be, so remember to factor this into your calculations and provide your bankruptcy trustee with the relevant documentation.
What if Your Income Changes?
If your income changes during the course of your bankruptcy, the amount you will need to pay will be affected.
If you start to earn more than expected, for example, you may have to pay a higher amount to your creditors via your trustee.
This occurs when you reach the surplus income threshold.
If you fail to do this, it could prevent or delay you from being discharged from your bankruptcy.
If your income decreases before you are discharged from your bankruptcy, you may still be required to pay the pre-agreed amount.
However, you could make higher payments at the start of your bankruptcy to offset lower payments towards the end.
This arrangement often works well for seasonal workers whose income may vary significantly over the course of a few months.
What Impact Does Your Income Have on a Personal Bankruptcy?
Your income has a major impact on your bankruptcy, so this is something you will discuss with your trustee in detail before you decide whether or not bankruptcy is the right form of debt relief for you.
By talking about this in advance, you can find the most effective way to overcome your financial problems without losing a significant portion of your income.
To learn more now, talk to a trustee with Bankruptcy Canada at (877) 879-4770.