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.

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.