Why Do I Have to Make Surplus Income Payments?

Surplus Income Payments & Why They are Necessary For Some Bankrupts

Are you unable to afford your house payments or vehicle costs?

If so, then you will need to make surplus payments.

Here’s everything that you need to know about this part of filing for bankruptcy.

Once you research bankruptcy, you’ll begin to understand and recognize some of the terms and conditions that are relevant to you.

For instance, you might find that you need to make payments to your trustee.

This could be the case, even if your income does cover the cost of the vehicle and home payments.

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What Is A Surplus Income?

According to bankruptcy law, there is a set way that the process should be managed and directed by a Licensed Insolvency Trustee.

It is important to understand the aims of the bankruptcy process including:


  • Providing the debtor with a new start free from their financial issues.
  • Offering creditors the assets that are accessible.


It’s also worth noting that there are exemptions to assets that will be sold off to pay the debt owed to creditors.

These exemptions are often based on a need to maintain the debtor’s livelihood.

It can include anything from living expenses to household goods.

Any surplus income or surplus assets is then directed towards creditors.

Essentially, this is a balancing act.

It’s about ensuring that creditors and the debtor gets what they need from the process.

Understanding How Bankruptcy Impacts Your Income

During the process of bankruptcy, it is necessary to know how your income is impacted and how the surplus income is calculated.

This is determined by several factors including:


  • The monthly income.
  • The number of people living in the home.
  • The amount that can be deducted for a household of a set size according to government requirements.


This formula is set to ensure that you do have a basic set amount that will cover your home expenses.

The balance is then paid to creditors for a limited number of months.

What If You Can’t Cover The Cost Of Your Home And Vehicle?

It is possible that when this formula is completed, you have less money than you need to cover the cost of your expenses.

This means that you are going to need to cut back on your spending within your budget.

Even then, you might find that you are unable to keep the house and the car.

House and car payments are secured loans and therefore are not impacted by bankruptcy.

The money you owe to these creditors will not be discharged.

In a situation like this, you will always need to make a choice of which one you want to keep, the home or the car.

This can be a tough decision and ultimately, you are going to need to think about what’s best for you and your family

If you are seeking debt relief but unsure about the requirements that you need to know, we can help.

As debt relief experts, our team can walk you through the process and ensure that you are fully prepared.

Contact us today for more details and to start dealing with your debt.

Canadian Bankruptcies

How to File for Bankruptcy
What is Bankruptcy?
Bankruptcy FAQs
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?

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