Perry Krieger & AssociatesWhat is Surplus Income?
Based on your household income and family situation, an individual who has filed an assignment in bankruptcy may be required to make payments from his/her net income to the Trustee which will then be paid to creditors. A Trustee can calculate the Surplus income required to be paid by you.
What if my income changes?
While bankrupt, surplus income is calculated on a monthly basis based on your actual income. If your income increases, the amount you pay increases. If your income decreases, the amount you pay is reduced.
How do I calculate surplus income?
Hosehold income: ( your net income + other household net income )
Surplus income: household income – Superintendent’s standard (see below)
Portion of surplus: (your income ÷ household income) * surplus income
Amount to pay: portion of surplus x (1/2)
What is the Superintentent of Bankruptcy’s standard?
For 2010, based on the number of people in the household (including the bankrupt), the amount to deduct from the net income is:
1 $1,884
2 $2,345
3 $2,883
4 $3,501
5 $3,971
6 $4,478
7+ $4,986
Why are other people in the household included in my bankruptcy?
Your creditors receive no money from other people in the household. The surplus income standard dictates that if your household as a whole has high levels of income, more of your income can be made available to your creditors. Household income is used since full household expenses are allowed.
Can I take any deductions?
You can deduct the normal remittances and manditory deductions (usually deducted by your employer) or if you are self-employed, any business expenses and deductions permitted by the Income Tax Act and your income tax.
Non-discretionary expenses are also deducted from your income including:
- Child support payments
- Spousal support payments
- Child care expenses
- Expenses associated with a specific medical condition
- Court-imposed fines or penalties
- Expenses under the Income Tax Act as a condition of employment
- Any debt where the Court has lifted the stay of proceedings and recourse authorized
- Interest paid on any student loans
Can you provide an example calculation?
1. A single person living alone who makes $2,500/mo (after tax)
($2,500 – $1884) ÷ 2 = $308 (payment per month)
2. A couple where the debtor earns $2,000/mo (after tax) and the spouse $1,500/mo
Household income: $2,000 + $1,500 = $3,500
Household surplus: $3,500 – $2,345 = $1,155
Debtor’s portion of the income: ($2,000 ÷ $3,500) = 57%
Debtor’s surplus: $1,155 * 57% = $658.35
Monthly payment to Trustee: $658.35 ÷ 2 = $329.18