What Does it Cost to File For Bankruptcy?

What Does it Cost to File For Bankruptcy?

Understanding the Cost of Bankruptcy Filing

Filing for bankruptcy is a critical financial decision that requires a thorough understanding of the associated costs. It’s not a free process as many presume. The costs involved, your income, family size, assets, and other factors significantly influence the total amount you’ll have to pay. This guide aims to shed light on what it costs to file for bankruptcy and how it varies based on different circumstances.

Cost Elements of Bankruptcy Filing

The cost of bankruptcy filing includes several elements, all of which contribute to the overall amount you’ll pay. Here’s a rundown of those cost components:

Administrative Costs

The administrative costs are the overheads associated with managing the bankruptcy process. This includes government fees, charges for the services offered by your Licensed Insolvency Trustee (LIT), and their administrative expenses.

Asset Surrender

To help repay your creditors, you might have to surrender certain assets under bankruptcy law.

Surplus Income Payments

If your income is significantly higher than the guidelines set by the Office of the Superintendent of Bankruptcy Canada (OSB), you’ll be required to make surplus income payments.

Administrative Costs Breakdown

The basic cost to file for bankruptcy in Canada for the first-time filers is $1,800. This amount is set by the OSB and can be paid in nine monthly installments of $200.

Surplus Income Payments

If your income exceeds the OSB guidelines by $200 or more, you’ll have to pay 50% of the surplus amount to your LIT for your creditors.

Assets You Can Keep

When filing for bankruptcy, you may have to surrender some of your assets. The list of bankruptcy exemptions, i.e., assets you can keep, varies by province. You might have to give up:

  • Your tax refund for the year you declare bankruptcy,
  • RRSP contributions you made in the 12 months before filing for bankruptcy (except in Alberta),
  • GST refunds during the term of your bankruptcy.

Whether you can keep your home depends on factors such as your home equity and your ability to continue making mortgage payments during the bankruptcy process.

How an LIT Helps You Determine your Bankruptcy Cost

An LIT plays a crucial role in helping you navigate the bankruptcy process. They will guide you through each step and help you understand what you can keep, what you must surrender, and what you’ll need to pay.

When Bankruptcy is the Right Choice

If bankruptcy is the best solution for you, your LIT can start the process immediately. If another option, like a consumer proposal, is a better fit, your LIT will guide you in that direction.

Free Consultation with an LIT

If you’re unsure about the costs of bankruptcy in your situation, consider meeting with a Licensed Insolvency Trustee for a free consultation. They can help you understand your financial situation better and guide you towards the most suitable debt solution.


Understanding what it costs to file for bankruptcy is crucial for making an informed decision. It’s not a free process, and the costs can vary considerably based on your income, family size, assets, and more. A Licensed Insolvency Trustee can help guide you through the process and determine the best debt solution for you.

Do you have more questions about bankruptcy? Don’t hesitate to book a free consultation.

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