Will I Lose My Canada Child Benefit (CCB) If I File For Bankruptcy?

A Look at the Impact of Going Bankrupt on Canada Child Benefit (CCB)

Filing for bankruptcy can often stir up a whirlwind of questions and anxieties. One concern that frequently surfaces is, “Will I Lose My Canada Child Benefit (CCB) If I File For Bankruptcy?” Fortunately, the answer to this is a reassuring no.

Understanding the Canada Child Benefit (CCB)

The CCB is a non-taxable stipend given monthly to eligible families to aid in the expenses associated with raising children below 18 years of age. It may also encompass the child disability benefit and various related regional programs.

Bankruptcy and the Canada Child Benefit (CCB)

While declaring bankruptcy does not directly affect your CCB, it’s important to note that your Licensed Insolvency Trustee will require you to account for the CCB in your household income calculations and reports. These monthly reports help ascertain if you have “surplus income”, which can influence the duration of your bankruptcy and the amount you need to pay.

The Bankruptcy And Insolvency Act (BIA)

The Bankruptcy And Insolvency Act (BIA) mandates that individuals filing for bankruptcy must contribute additional funds to their bankruptcy estate based on guidelines set by the Government of Canada. These guidelines determine the net monthly income thresholds necessary for maintaining a minimal standard of living in Canada. Each dollar a bankrupt family earns above this limit is subject to a 50% surplus income payment for the duration of the bankruptcy. All forms of household income, including the Canada Child Benefit (CCB), are factored into this calculation.

Example of Surplus Income Calculation

To illustrate, let’s consider the 2021 guideline for a two-person household, which stands at $2,799. If a single parent earns $3,000 from employment and receives a $550 CCB, the total household income would be $3,550. The surplus income is calculated as follows:

Total household income – guideline = surplus income

So, $3,550 – $2,799 = $751 in surplus income.

The parent’s share of the household income is 85% ($3,000/$3,550), equating to $637.50 in surplus income (85% of $751). The parent would then be obliged to contribute $318.75 (half of $637.50) to his bankruptcy estate for 21 months if it’s his first bankruptcy, or 36 months if there’s been a previous bankruptcy.

For separated or divorced spouses, the child tax is considered part of the household income for the parent with primary custody.

Other Concerns: Will I lose my house if I go bankrupt?

Another question that often crops up is, ‘Will I lose my house if I go bankrupt’. While the answer largely depends on various factors, in most instances, you are unlikely to lose your home. For a more detailed explanation, consider reading the linked article.

Working with a Licensed Insolvency Trustee

Bankruptcy Canada is a Licensed Insolvency Trustee, providing personalized services to help Canadians cope with financial stress. We offer:

 

  • A bespoke process that isn’t assembly-line-like.
  • Prompt responses and issue resolutions from their experienced team.
  • A comprehensive review of your debt solution options, including filing a consumer proposal or personal bankruptcy.

 

Once you file a consumer proposal or personal bankruptcy, the team at Bankruptcy Canada handles all communication with your creditors. Your unsecured creditors are mandated to cease all contact or legal proceedings against you.

Reach Out for a Free Consultation

Bankruptcy Canada offers complimentary consultations to assess your financial situation and provide practical debt resolution options.

In conclusion, filing for bankruptcy doesn’t result in the loss of the Canada Child Benefit (CCB). However, it does require careful navigation and understanding of bankruptcy rules, surplus income, and potential impacts on your financial situation. A Licensed Insolvency Trustee can guide you through this complex process, ensuring you make the best decisions for your unique circumstances.

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