2013 Bankruptcy Guidelines

2013 Suprintendent Surplus Guideline
2013 Suprintendent Surplus Guideline

Each year the Office of the Superintendent of Bankruptcy updates the Surplus Income Guidelines that are used to determine the cost and length of every bankruptcy filed in 2013.  I have just received an advanced copy of these numbers and thought you all might be interested to see them. For those of you who are unaware the Superintendent Surplus Income Guideline is a set of figures that the government sets and distributes to each trustee in Canada and they are important because they are used to calculate the cost and length of a bankruptcy.  These numbers are supposed to be adjusted each year to account for inflation and other changes to our cost of living, although whether or not the increase is sufficient when we are paying 1.11 per liter at the pump, it is definitely debatable. Regardless, these are your 2013 Surplus Income numbers:

Size     Allowable Net Income
1                      2006
2                      2497
3                      3070
4                      3728
5                      4228
6                      4768
7+                    5309

I know this may look like Greek too many of you, but let me explain.  When you file for bankruptcy your cost of bankruptcy is largely determined by the amount of money you make and the number of people you support.  Essentially the government sets a threshold and if your income falls below the allowable amount per your circumstances then you qualify for the minimum cost, which is set by the trustee’s office.  However, if your income is higher than the allowable amount, then the cost and length of your bankruptcy are dependent on a formula that is based on these figures.

Here is an example of how you would calculate your cost of bankruptcy if you were a single individual making $2,736.00 after taxes each month.  First you take his income and subtract out the amount allowable above ($2,736.00 – $2006.00 = $730.00).  The difference, which we calculated to be $730.00 is considered to be his surplus income.  The way the legislation works is that you don’t have to pay the full amount of the surplus income into the bankruptcy as 50% of it you get to keep.  But the other half becomes the payment ($730.00 / 2 = $365).  So in this example the anticipated payment would be $365.00 per month.  The other part of this calculation deals with the length of bankruptcy.  The legislation stipulates if your Surplus Income figure is $200 or greater, you bankruptcy will be extended.  If this is the first time a bankruptcy is filed it will be extended from 9 months to 21 months.  So in this example, if we assume one individual who has never filed bankruptcy before, who makes $2,736.00 after taxes each month, based on these new figures he would be paying $365.00 per month for a total of 21 months.

Admittedly, this is a complicated calculation.  The basic principle is the more you make the more a bankruptcy will cost, but to determine what you would expect you are best to contact me directly.  Feel free to either call me at 780-435-5110 or contact me through the web and I would be happy to help clarify things.

2012 Annual Bankruptcy Statistics released

Annual Bankruptcy Statistics Statistics
2012 Annual Bankruptcy Statistics

The 2012 Annual Bankruptcy Statistics were just released by the Office of the Superintendent of Bankruptcy. What they show is that both personal bankruptcies and proposals declined almost 4% across Canada. This is the third year in a row that we have seen a decline. However, as Sharon Hoyes pointed out (see Personal Bankruptcies in Canada Decline in 2012), this is despite a consistent increase in the level of consumer debt across Canada over the same period of time.
Another interesting trend is that we continue to see more Canadians are looking for ways to avoid a bankruptcy and as a result we see that the decrease in total bankruptcies of 8.3% in 2012. Which is contrasted with an increase number of consumer proposals filed of 4.2% in the same period (to read a good article about this see Record Number of Consumer Proposals Filed in Canada in 2012). While this was an all time high number of proposals filed across the country of 46,903 in certain areas in Toronto there were actually more proposals filed than bankruptcies.
While we haven’t quite seen this trend of more proposals than bankruptcies here in Alberta, we do see a reduced number of bankruptcies and increased consumer proposals) as compared to 2011. Here in Edmonton we saw the number of consumer bankruptcies filed dropped by 24% and the number of consumer proposals increased by 4.3%. Across Alberta we see the difference is even greater as the total bankruptcies filed dropped 18.1% and the total number of proposals filed increased 14.3%.
For any of you who are not aware, a consumer proposal is one of the most common alternatives to bankruptcy, and one that clearly is becoming a more common option for those in financial distress. One of the major reasons for it’s increase in popularity is that it contains many of the benefits of a bankruptcy (i.e. court protection, the ability to stop a garnishee and court action, eliminate all interest etc.), avoids many of the disadvantages of a bankruptcy (i.e. monthly reporting, long term stigma of filing a bankruptcy, loss of assets etc.) and at the same time will allow you to pay a portion of your outstanding debt over time in a fashion that actually fits into your budget. It is an excellent alternative to the filing of bankruptcy and works very well for people who can’t afford to pay their debts in full but still have the ability to pay a portion of their debt.
Regardless of the statistics, the increasing amount of consumer debt, or the health of the economy. If you are struggling with debt you clearly are not alone and it is important that you know there are ways to deal with this debt. If you are not sure what way to turn I would recommend you talk to me or another Bankruptcy Trustee in your area. You will be provided a free consultation that is designed to help you to assess where your finances are at and what options you can qualify for. There is no cost or obligation for doing so and we are happy to help.