Surplus Income…

December 23rd, 2006 by Questions

I’ve just filed for bankruptcy due to health problems, and have been waiting for my long term disability company to make payments for my time off previous to the bankruptcy.

I know any income I get after I filed is subject to surplus (which it will qualify for)… but I have gone 4 months without a paycheque and is there any way I can keep even part of the money to help pay for prescriptions and stuff upcoming?

My trustee says he will read the fine print on the disability papers but he said be prepared to lose it all. I know my creditors deserve any monies that can be supplied, but don\’t I deserve a portion of these funds as I would in a regular month?

Questions

One Response to “Surplus Income…”



December 27, 2006 at 8:11 am, A licensed trustee said:

When you finally receive your retro-active disability cheque your trustee has two alternative that they may chose from in determining how to handle the cheque.

The first option is to treat the retro-active payment as a windfall and seize the entire amount for the benefit of your creditors. This may seem harsh, but the assumption is that you relied upon your credit during the period that you received no payments and therefore the money should go towards your debt.

The second option (and frankly it is the more common approach) is to treat the payment as income in the month you receive it. That income will be subject to the Surplus Income Standard and therefore a portion will be payable to your trustee for the benefit of your creditors. If you trustee selects this approach you will be able to retain a portion of the money.

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