Question: If a couple files for bankruptcy after a failed consumer proposal due to loss of income are they penalized by an extended discharge if employment is found during bankruptcy because of a higher surplus income. If so would this not be penalizing for finding employment and defeat any initiative to seek employment?
Answer: Good question. Surplus income payments are not designed to be a “penalty”. The theory is that the more you make, the more you should be able to contribute to your creditors. However, you are correct. If, during your bankruptcy your income increases dramatically, it is possible that your bankruptcy will last longer than the minimum nine months.
However, if that did happen, you could discuss it with your trustee, and you could also request a discharge hearing in bankruptcy court and explain the circumstances to the bankruptcy judge, who may be lenient given the circumstances (ie. they probably would not punish you for working hard).