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Surplus Income Frustration

Is there any indication that the new September 18 rules on Surplus income might be changed in light of the economic fiasco?

Here`s why I ask. My husband lost his job and the savings were depleted on a reno project that we were doing for a rental property. Following this we were unable to make payments and have filed for bankruptcy. We surrendered both houses (ours and the rental-mid reno) both vehicles, recreation trailer and quads. Yes, we were carrying too much debt, but bringing home equal incomes made it doable.

Now we`re in bankruptcy and my husband is out of work. As such, he will be in bankruptcy for only 9 months. I on the other hand am now supporting both of us and get the added bonus of having to be in bankruptcy for 21 months. And I`m not only paying my monthly surplus income calculated payment, but his too! How unfair is this!

Posted from: Alberta

One Response to “Surplus Income Frustration”

A licensed trustee said...

Let me start by stating that I doubt very much you are going to like my answer…

Bankruptcy law in Canada is designed to strike a balance between the individuals that need relief from their debts and the creditors that loaned them money. The surplus income rules are one of the main tools for doing this.

The theory is that a family requires a base amount of income in order to maintain a reasonable standard of living. Any income in excess of that amount is split between the individual and their creditors.

If you and your spouse are both required to pay surplus that means your household income is above the standard and that both you and your husband have some form of income (if he had no income at all then he’d have no requirement to pay surplus). This is the price you have to pay in order to be relieved of your debts.

Is this fair – ask your creditors if they think it’s fair that you only have to pay for 21 months and then the debts are gone. I think you know what they would say…

If you really don’t want to make the payments then don’t – your trustee will schedule a hearing before a bankruptcy judge and you can explain to the Court why you feel you should not have to pay.

Sorry – I did start by stating that you wouldn’t like my answer.