Surplus income puts me further in debt

August 15th, 2008 by Questions

I have just filed for bankruptcy. I have also been approved for long-term disability, the amount of which is $2,113/mo, which is just enough to pay bills and buy food. However, my LICO is $1,836, meaning I have a $227 overage. The paperwork we initially did was done using the LICO, leaving me -$166/mo, after the monthly payment to my trustee. Submitting half of the $227 surplus, I am still approximately -$55 each month. I understand the concept of surplus income well enough, but I am having trouble understanding why I`m having to pay surplus that isn`t really surplus – that $227/mo would go to bills and food, just like everything else. It wouldn`t be used for savings.

Can you explain this? If submitting surplus puts me further in debt, am I still required to pay it? If that is the case, even though I`m on disability and will be for some time – and will be likely losing more income -, it might have been better for me not to file at all.

Posted from: Alberta


One Response to “Surplus income puts me further in debt”

, Barton Goth - Goth & Company Inc. - Bankruptcy Trustees said:

The idea behind surplus is to equalize the process so it is as “fair” as possible based on the amount of money coming into the household. What the superintendent has done is they have set limits for what they believe people should be able to live on and that is what they use to determine if any surplus has to be paid. So the response the superintendent has to a situation like this is that you are living beyond your means and need to find somewhere to cut corners.

Therefore, if you owe surplus it is mandatory that it be paid if you want to be discharged from bankruptcy. Now for the record, do I agree with the system, no. There are many small problems with this method (i.e. cost to live in Alberta is significantly more expensive than in other parts of Canada, and this regionalism is not respected) but it is federal law and we must abide by it.

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