Cost of Filing Bankruptcy in Canada
January 17th, 2011 by A Licensed Insolvency Trustee
What does it cost to file bankruptcy in Canada? As a trustee I have handled thousands of personal bankruptcy filings, and that may be the most common question I am asked. For many, the answer is also somewhat confusing.
In simple terms there are three costs to filing. There is a minimum contribution, there is a surplus income payment, and then there is the money you lose in the process due to your assets.
1 Most trustees in Canada will require you to make a minimum contribution each month towards the administrative charges of your bankruptcy. That may be in the range of $200 to $250 per month, and they may require a month or more of contributions to be contributed when you sign the bankruptcy paperwork. As each case is different, your trustee can explain this to you in more detail.
2 Surplus income is a more complicated concept, but in simple terms the government allows you to earn a base amount each month. If you earn over that amount, you are required to pay more. We have lots of details on this site, including our post on Surplus Income and Bankruptcy in Canada, and surplus income in the bankruptcy process in Canada.
3 Finally, if you file bankruptcy you will lose any non-exempt assets. For example, you will lose any money you have contributed to your RRSP in the last twelve months. You also lose your tax refund, HST credits, and any equity you have in a car or house. More details can be found in our article on bankruptcy exemption limits in Canada.
For more information, please see our article on the cost of filing bankruptcy in Canada, or review other articles on the cost of bankruptcy.
Two final comments:
First, the calculations to determine the cost of bankruptcy are confusing, so we strongly recommend that you arrange a no-charge initial consultation with a bankruptcy trustee in Canada.
Second, if you are concerned about the cost of bankruptcy, a consumer proposal may be a better option for you, because often the monthly payment in a consumer proposal is less than the monthly payment in a bankruptcy. Please see our free, interactive debt options calculator for more information.