Many people who come to see us in our GTA offices want to know how much it is going to cost them to file for personal bankruptcy in Toronto. The short answer is “it depends”. How much you will have to pay in a bankruptcy depends on how many people are in your family, and how much income you earn.
Each month, you will be required to report to your Trustee your earnings (this will include submitting a copy of your pay stubs). This is then compared to a limit that is set by the government on what a person is allowed to earn while they are bankrupt (the limit changes depending on how many people are in your family). Half of anything you earn over that government limit is required to be paid into the bankruptcy – this is called “surplus income”. In essence, the more you make, the more you will have to pay. For example, a single person earns $3,000 in a month. We could compare that to the $1,980 government limit for 2012 for a family of 1. This individual has earned $1,020 over the limit, so $510 (50% of $1,020) is required to be paid to the bankruptcy as surplus income. These calculations can become quite complicated based on additional factors such as child support payments, medical expenses, etc. Your Trustee will perform these calculations for you.
There is also a minimum payment that you will be required to make each month during your bankruptcy. This payment will cover the costs your Trustee has for administering your file including court fees, mailing, and other government fees.
Another aspect that could lead to a cost for you in bankruptcy is if you own assets. In Ontario, you may keep the following assets when you go bankrupt:
- Food, fuel, household furniture, appliances: up to $11,300.
- Clothing: up to $5,650.
- One motor vehicle (needed for occupation): up to $5,650
- Health aids: none.
- Tools of your trade: up to $11,300.
- Farm property: seed for up to 100 acres, feed and bedding for the current winter, 14 bu. potatoes, other up to $28,300.
- Principal residence: none.
- Most pension plans, life insurance policies, and certain RRSPs.
Anything that you own that has more value than this, you will either have to surrender to your Trustee, or you may be able to buy your asset back (i.e. you would make a payment into the bankruptcy for the amount the asset is worth in order to keep it). Generally, people that have significant assets are therefore better off to consider a consumer proposal.
As you can see, there are many different factors and details that go into determining what a personal bankruptcy would cost for you in Toronto. By scheduling a free initial consultation at one of our offices, we will be able to review your specific situation and tell you what a personal bankruptcy would cost for you, as well as review all of your other debt management options. Email or call us today to set up for free consultation and let us help you get your own fresh start.