common law spouse question

January 23rd, 2007 by Questions

If all my debt has nothing at all to do with my fiancee, does her income still count towards income limit after I declare bankruptcy?


One Response to “common law spouse question”

, A licensed trustee said:

If you are living together then yes, her income will be included in the household total when your trustee calculates your monthly payment, BUT you only pay your portion of the surplus penalty.

This can be confusing – I will try and provide an example.

John earns $2000 net a month
Jane earns $1000 net a month.

If John files for bankruptcy his monthly surplus income payment (on top of any basic fee payment he has to make to his trustee) will be:

= (household income over the government standard) x (John’s share of the income) x the penalty rate

=($2,000 + $1,000 – $2,194) x ($2,000 /($2000 + $1000)) x 50%

= $806 x 2/3 x 50%

= $270

I hope this helps – make sure you ask your trustee to go over this again. Surplus can add a lot of money to the cost of filing bankruptcy and it is important that you understand how it works.

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