Question: Hi there, I’m researching my options with the possibility of filing for bankruptcy. I’ve recently met with a trustee in Mississauga who is requesting 21 months worth of post dated cheques for approx $303 per month, with the first payment in cash. My income surplus is about $600 per month. I’ve read that the timing is approx 9 months so why 21 months at $303 per month with first payment in cash? I’m questioning credibility with this trustee. I’m a single mom. Please help with this question. Much appreciated.
Answer: First, you are correct to question the credibility of a trustee that asks for post dated cheques in a bankruptcy. Most trustees use pre-authorized electronic payments; it`s strange that they would make you write out 21 cheques.
Second, it would appear that the trustee has done a poor job of explaining the concept of surplus income in a bankruptcy in Canada. A first time bankruptcy in Canada lasts for a minimum of 9 months. However, if you have surplus income, your bankruptcy is extended for an additional year, for a total of 21 months. It would appear that your trustee has assumed therefore that you will be required to pay $303 per month for 21 months in surplus income payments.
However, the trustee is required to determine surplus income each month, so it is very unusual for the trustee to determine the amount in advance. A trustee is required to obtain proof of your income each month, at least for the first six or seven months, to determine how much you will be required to pay.
Here is an article that explains how surplus income is calculated, and here is a link to a surplus income bankruptcy calculator.
