Question: I am preparing to file for personal bankrupsy in Ontario, in January, 2011. I have approx. $55,000 in unsecured debt, which includes student loans and credit cards. I have been a stay at home parent for more than 6 years, and as such, I do not have an employment income.
I married in 2008, and we have two children. Everything is in my spouse’s name. The house, vehicles…everything, and they were all purchased prior to the marriage. I have no assets, savings, life insurance..
My spouse made a little over $100,000.00 this year.
I received child support totalling $3500.
I am trying to determine what my monthly “bankrupsy” payment would be… Could someone help me?
Answer: Your best option is to contact an Ontario bankruptcy trustee, and have them walk you through the math to determine your surplus income payments in bankruptcy in Ontario. Even more importantly, you should ask the trustee to explain all of your options.
You currently have no income, and no assets. If you were to stop paying your debts, your creditors could not garnishee your wages, or seize your assets, because you don’t have any. So, for you, the first decision is to decide whether or not you need the protection from your creditors gained by going bankrupt. If you plan to be out of the work force for an extended period of time while you raise your children, one possible option for you is to do nothing.
However, if after reviewing all of your options you decide to file bankruptcy in Ontario, a trustee can explain the surplus income calculation for you. Here’s a simple example:
In 2010 a family of four is permitted to have income of $3,501 per month. If your spouse earns $5,800 per month after tax, and you receive child support of $300 per month, your family income is $6,100 per month, or approximately $2,600 over the allowable limit. If both you and your spouse were bankrupt, you would pay half of the excess, or $1,300 in surplus income payments each month.
However, your spouse is not bankrupt, so you are only required to pay your share of the penalty. In this example your income is 5% of the family total, so you would be assessed 5% of the penalty, or approximately $64 per month (because your share of the surplus income is $128 of the total).
Under current rules you are only required to make surplus income payments if your income is more than $200 over the limit, so if your income is only $128 over the limit you would not be required to make any surplus income payments.
However, this is a very simplistic explanation. We have not factored in whether or not you have previously been bankrupt, or whether or not your family income fluctuates.
So, again, to receive an accurate estimate of the potential cost of your bankruptcy, you must meet with a licensed Ontario bankruptcy trustee.
