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Surplus Income Calculation Explained

Ok. I have a couple of questions. I have heard different answers so I thought I would check with the experts. First I will explain the current situation. I filed for bankruptcy and then meet someone. She later moved in with me. The trustee told me that we were considered common law the moment she moved in. I have been submitting my paystubs as well as hers. We believed that all was in order. We submitted her bank statements for 3 months to show proof of deductible payments. The problem comes in now because we were told her income tax had nothing to do with my bankruptcy so we did not account for her 2 year income tax refund for the two years preceding my bankruptcy. We also were told that the 2 years of back gst were not counted either. My spouse also recieved a tution bursary from the tim hortson children foundation to assist with her school costs. We did not claim any tuition fees because I did not think they were deductible. Now they are asking for a large amount to be paid in order to be released from bankruptcy. Is this accurate, can they count my non-bankrupt spouses back income tax and her bursary for school?

Posted from: Newfoundland and Labrador

One Response to “Surplus Income Calculation Explained”

Jillian Taylor-Mancusi, Trustee | B.A. | C.I.R.P said...

Your question seems to refer to the calculation of your surplus income and required payments pursuant to Directive 11R of the Bankruptcy and Insolvency Act. This directive provides a formula in order to establish the amount of this monthly payment. While your spouse may not be liable for the debts, her income is a factor in the formula, in that it deals with household income. Her income includes income tax refunds and bursaries as well as other earnings. Your trustee would have explained to you how the formula works. In general terms, while the formula includes all household income your ability to pay reflects your percentage of the household income. In a bankruptcy you are to pay the required amount each month for the length of time that you are bankrupt. This amount of time can be anywhere between 9 months on 36 months depending on the amount you are required to pay as well as whether or not you have filed an assignment in bankruptcy in the past.

There is some latitude available in assessing your required payment. If you disagree with the trustee’s assessment, the Bankruptcy and Insolvency Act provides for a mediation process. You can require such a mediation through your trustee. If the mediation fails to produce a satisfactory result, the matter will eventually be heard by the Courts. The Courts have the authority to discharge you absolutely, or impose a conditional order of discharge that reflects what the court thinks is fair and reasonable in your particular circumstances.