How Much Does Bankruptcy Cost in Canada?
Many people might be surprised to learn there is an obligatory cost associated with filing bankruptcy in Canada, but it is an important factor in considering whether or not bankruptcy is right for you.
For this reason, it is a good idea to review whether an alternative to bankruptcy might be more suitable for your personal circumstances. The best course of action is to begin by contacting a Licensed Insolvency Trustee. With Spergel, you will receive your own trustee to discuss your options, and to walk you through each step of the process of filing bankruptcy.
Are there any upfront costs for filing bankruptcy?
The only professionals able to file bankruptcy in Canada are Licensed Insolvency Trustees. At Spergel, you are able to book a free consultation to discuss your options, meaning there is no upfront fee. Your trustee will discuss your personal financial circumstances with you, and either make a recommendation to file bankruptcy or suggest a bankruptcy alternative like a consumer proposal. If you decide to proceed in filing bankruptcy, there will be some costs incurred which we will share below.
How much does it cost to file bankruptcy in Canada?
There are a few costs incurred when it comes to filing bankruptcy, although arguably it is a small price to pay for clearing unmanageable debts and for achieving peace of mind. These fees include a base contribution cost, as well as a surplus cost and an asset cost where applicable:
Base contribution cost
This is a fee that covers administrative costs and expenses, as well as the price of the expertise and experience of a Licensed Insolvency Trustee to assist with the process. If it is your first time filing bankruptcy, this will most likely be the minimum cost of $1,800. This is split into monthly payments of $200 per month for nine months to ensure it is manageable for you to pay. In some cases, the base contribution cost for filing bankruptcy can be higher.
Surplus income cost
Surplus income is any earning above a government threshold, based on household income and the number of people within a household. If this threshold is exceeded by over $200, this is considered as surplus income. The threshold is the amount that the Canadian government says is a reasonable income on which to live while filing bankruptcy. Surplus income, therefore, is not applicable to everyone filing bankruptcy. Having a surplus income can also affect the time it takes to file bankruptcy. Find out more about how long filing bankruptcy takes.
The value of your assets must be factored into the cost of filing bankruptcy. Any non-exempt assets will need to be reassigned to your Licensed Insolvency Trustee in order to pay towards the value of your debts to creditors. This is in exchange for clearance from these debts. If you have high-value assets, it is a good idea to work with your trustee to explore your options to see if there is a more beneficial form of debt relief. Learn more about your assets and bankruptcy.
How does the cost of filing bankruptcy compare to other forms of debt relief?
If you are worried about the costs of filing bankruptcy, work with your Licensed Insolvency Trustee to consider bankruptcy alternatives. Compared to other forms of debt relief, bankruptcy requires debtors to reassign their assets in order to clear their debt. For debtors with high value assets, another form of debt relief like a consumer proposal may be more appropriate. Here is how much filing bankruptcy costs in Canada versus bankruptcy alternatives.
|Form of Debt Relief||Fees||Asset Protection|
|Bankruptcy||$1800 minimum base contribution cost, plus surplus income costs||No|
|Consumer Proposal||$1500 filing fee, as well as 20% of future payments||Yes|
|Debt Consolidation||Loan fee of 1-3% of the loan amount||Yes