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WHAT CAN I DEDUCT FOR SURPLUS INCOME IN BANKRUPTCY?

what can I deduct for surplus income in bankruptcy, surplus income in bankruptcy, surplus income, bankruptcy, Bankruptcy & Insolvency Act, Office of the Superintendent of Bankruptcy, trustee, starting over starting now“What can I deduct for surplus income in bankruptcy?” is one of the questions about bankruptcy that we are very frequently asked. The concept of surplus income in bankruptcy doesn’t really seem to make much sense. After all, if you are bankrupt, how can you have surplus income? So let’s start at the beginning and clear up all the confusion in order to answer the question “what can I deduct for surplus income in bankruptcy”.

What is surplus income in bankruptcy? If you have filed an assignment in bankruptcy, under the Bankruptcy & Insolvency Act you are required to make a surplus income payment each month based on your income. The more you earn, the more you are required to contribute. The Office of the Superintendent of Bankruptcy sets limits for what a family is allowed to earn. The larger your family, the more you are allowed to keep. The thresholds are increased each year. The government has established a list of income levels for households of different sizes. If the household’s income exceeds the level set by the government then you have surplus income in bankruptcy and additional payments must be made to your trustee during your bankruptcy. The government’s instructions regarding surplus income can be found in Directive 11R2 from the Office of the Superintendent of Bankruptcy.

What can I deduct for surplus income in bankruptcy? There are some allowable deductions for surplus income in bankruptcy:

  1. child support payments
  2. spousal support payments
  3. child care expenses
  4. expenses associated with a medical condition
  5. Court-imposed fines or penalties that are in the process of being paid
  6. expenses permitted by the Income Tax Act (or similar provincial legislation) that are a condition of employment
  7. any other debt where a stay of proceedings has been lifted by the Court, and a recourse authorized
  8. interest paid on debts that are not dischargeable in bankruptcy under paragraph 178(1)(g) of the Act

As a result of these deductions in the calculation, that is why everyone wants to know what can I deduct for surplus income in bankruptcy.

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