Question: Does declaring bankrupcy affect receiving the child tax credit from the Federal Government?

The simple answer is no, you will continue to receive your Child Tax Benefit during bankruptcy.  But unfortunately things aren’t always that simple.

So now for my Caveat, your Child Tax Benefit potentially could be indirectly affected, or maybe it is better to say could that your Child Tax Benefit could indirectly impact the cost of your bankruptcy.  The reason for this is that the cost of bankruptcy is based on your level of income (The federal governement sends a guidleline to every trustee in Canada that is used to determine your cost).  Essentially this guideline sets a threshold (and in 2012 for one person in the household that threshold is $1980.00 after tax).  If your income exceeds this threshold then you would have to pay 50% of the difference into your trustee.   hope this is of some assistance to you. If you have a more specific question you may want to contact your trustee or e-mail me directly.  The Child Tax Benefit is considered part of your income and if all your income is above the threshold that is set then there will be a corresponding increase to the cost of your bankruptcy.

I know this sounds confusing, and I would be happy to go through this with you in more detail.  The best way to do this is to contact me at 780-435-5110, I will get you to summarize your total net income in a typical month and then I will be able to calculate the anticipated payment each month.

So no you don’t directly lose your Child Tax Benefit, but it may impact the total cost of your bankruptcy.

Barton Goth

Barton Goth, BA, MBA, CIRP is a licensed Trustee in Bankruptcy with Goth & Company Inc. In addition, he holds a Masters in Business Administration with a specialization in finance. Barton regularly meets with people seeking help with their debt problems and works with them to find the best possible solution.