Each year, the Office of the Superintendent of Bankruptcy announces the new surplus income limits for individuals filing bankruptcy. Surplus income is a calculation that the government carries out, based on household income and the number of people living in a household. It then uses these calculations to establish the net monthly threshold that a family or individual may need to have a reasonable standard of living in Canada. This then determines the amount of money you may need to pay into a bankruptcy. In this article, we share the surplus income limits for 2023 for these thresholds and what this could mean for you if you are considering filing bankruptcy.
Surplus income limits 2023
|Size of household (number of individuals)
While the surplus income limits 2023 are important, you might well be wondering how that translates into something meaningful for you. Here is how these numbers translate into bankruptcy. If you decide to file bankruptcy, you will pay more if you earn more. If, for instance, you live with your partner, you are a family of two and have a surplus income threshold of $3,165 per month. If together you were to earn a net income of $4,000 per month, you are $935 over the limit and would need to pay this in surplus income. If you file bankruptcy, you will need to pay half of your surplus income to your creditors. This would mean, therefore, making a surplus income payment of $467.50 each month. This will vary in line with any income increases or decreases that you may have.
What does surplus income mean for bankruptcy?
If you are thinking of filing bankruptcy, you should understand what your income might be during your bankruptcy period. This will help you to calculate what your surplus income might be, and therefore what the cost of bankruptcy might be for you. If your income increases, your surplus income will increase as a result. If your income decreases, or you become unemployed at any point, your surplus income will decrease accordingly. If you are concerned about how much you might need to end up paying in surplus income, or if you think your income will increase during your bankruptcy, you may want to consider a bankruptcy alternative. A popular option is a consumer proposal. A consumer proposal is the process of a Licensed Insolvency Trustee working with you to suggest an affordable monthly repayment figure to your creditors. Your Licensed Insolvency Trustee will negotiate with your creditors on your behalf. One of the advantages of a consumer proposal is that the fixed figure is agreed upfront. This means that should your income increase, there will be no impact on the monthly payments you make. Consumer proposals can also reduce your debt by up to 80%, and at Spergel, any consumer proposals we file have a 99% acceptance rate.
If you have questions on the surplus income limits 2023, or about paying surplus income, book a free consultation with Spergel. Our expert Licensed Insolvency Trustees will review your financial circumstances and advise you on the best form of debt relief for you. We have been helping Canadians to gain debt relief for over thirty years, and we are here to help you too.