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New Bankruptcy Laws

My husband and I declared Bankruptcy individually in February 2009. It is our first bankruptcy and from what I`ve been told we should be automatically discharged in November. I`m reading about the new Bankruptcy Rules and more specifically Surplus income. We have averaged a surplus payment of $523.29 each per month since our bankruptcy began. In reading the article provided regarding the new rules on your site there is a statement which concerns me `Your trustee is required to calculate your surplus income each month. Before the end of the eighth month of your bankruptcy (if this is your first bankruptcy), the trustee will take the average of your surplus income. If, on average, your income was more than $200 per month over the limit, your bankruptcy is automatically extended from 9 months to 21 months. If your income is the same each month, averaging won’t make a difference.` Will this apply to us due to the fact that our surplus payments exceed $200 or to those who choose to file after September 18th?

Posted from: Ontario

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One Response to “New Bankruptcy Laws”

A licensed trustee said...

The good news – to the best of my knowledge, the new laws are not going to be applied retro-actively for surplus income. That means your bankruptcy will not automatically be extended to 21 months.

The bad news, if your surplus has averaged $523/month then you should expect your bankruptcy to be extened under the current laws. This may be done at your trustee’s discretion anywhere from 3 to 12 months. I think you should call your trustee and ask them what they intend to do…

One of the principal reasons that the law is being switched from the trustee’s discretion to axtend to 21 months to an automatic extension under the new law is that trustees have not been consistent in the past with these extensions. In some parts of the country, the East coast for example, the practice has been to extend to the maximum 21 months if there has been any surplus. At the other extreme some trustees in the Toronto area were never extending. By switching to an automatic extension one of the government’s goals is to have all Canadian’s being treated the same – regardless of where they live and the trustee that they are dealing with.