Every financial situation is unique, but the causes of bankruptcy are often very similar. Our federal bankruptcy system exists to help when you can no longer afford to pay bills as they become due. There are three reasons the majority of people find themselves in this position; family breakdown (i.e. divorce or separation), job loss (or a significant change in household income) and, arguably the most stressful debt contributor – illness or injury. One might argue that illness or injury can lead to both job loss and complex issues within the family unit.
How Can A Medical Marijuana Prescription Impact The Bankruptcy Process?
Unfortunately, when we are not well our medical expenses go up while our income goes down. When dealing with chronic illness or a difficult injury prescriptions can be costly. Medical Marijuana is useful in the treatment of a variety of illnesses and conditions Many Canadians are now seeking out this “new” alternative to traditional medicine. But, health benefits don’t always cover cannabis, making it an expensive out-of-pocket cost.
A first-time bankruptcy typically lasts a minimum of 9 months. A Licensed Insolvency Trustee monitors your income. A bankrupt who earns a lot of income can expect to be bankrupt for 21 months. A bankrupt who includes expensive medical costs can expect bankruptcy to cost less. A medical marijuana prescription can have a significant impact on the length of the bankruptcy process.
What is a Non-Discretionary Expense?
While it is true that the length of a bankruptcy is determined by income, it is also impacted by a specific group of expenses referred to as “non-discretionary”. Expenses under this category include child support payments, daycare, and prescribed medications that are not covered by a medical plan (which includes doctor-prescribed cannabis). During the initial months of bankruptcy, you are required to send your Licensed Insolvency Trustee monthly reports summarizing all income earned and receipts for non-discretionary expenses. We review your non-discretionary expenses and deduct them from your income. As a result, your non-discretionary expenses can change the length and cost of your bankruptcy.
What is Surplus Income?
Our National household income averages are based on family size and statistical data. Currently, the average monthly household income of a single person is $2,152.00. Average family income amounts are updated annually on the federal government’s website here: 2018 Surplus Income guidelines. During bankruptcy you will submit a report of income and expenses each month. Your Licensed Insolvency Trustee will review this information for any “surplus”.
Surplus income is the difference between your net monthly income and the national average for your family size – less non-discretionary expenses. The bankruptcy process takes longer if you earn significantly more than the national average. Your net income will be lower whenever your non-discretionary expenses are high. A lower monthly income may fall below the national average. If your prescription for medical cannabis is expensive and out-of-pocket, deducting this cost from what you earn each month can shorten your bankruptcy. Submitting accurate monthly budgets with proof of your expenses is a very important part of the bankruptcy process.
Will I Need a Doctor’s Note?
You must provide proof to benefit from the inclusion of your medical costs and lower your income. In fact, all non-discretionary expenses require supporting documentation during your bankruptcy. Your Licensed Insolvency Trustee may not require a doctor’s note. Keep all prescription receipts and submit them with your monthly budgets to include them.
To learn more about the bankruptcy process and to find out if your medical marijuana costs will significantly decrease the time you will spend in bankruptcy, please call 310-4321 to book your free consultation. A Spergel expert will review your household income, expenses, and advise you of your options.