Tag: surplus income

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#VIDEO – IS SURPLUS INCOME IN BANKRUPTCY POPULAR? #

This is one of the most popular questions about bankruptcy we are always asked. The concept of surplus income in bankruptcy doesn’t 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. That way we can explain the answer to the question “What is surplus income in bankruptcy?”.

The answer

Heading into bankruptcy, your licensed insolvency trustee (LIT) must make an assessment. The more you earn, the more you must contribute. A definition is:

The amount of a debtor’s total income that exceeds what is necessary to maintain a reasonable standard of living. A reasonable standard of living is according to the standards set by the Office of the Superintendent of Bankruptcy. This is also sometimes called the OSB surplus.

The actual Superintendent’s standards are right at the poverty line so don’t get happy when you see words like “reasonable standard of living”. The bankrupt must make payments out of this surplus income to the LIT for distribution among the creditors.

The Office of the Superintendent of Bankruptcy sets limits for what a family can earn. The larger your family, the more you can keep. The thresholds increase each year. The government has established a list of earnings levels for households of different sizes.

If the household’s revenue exceeds the level set by the government then you have surplus income. Payments are made to your LIT. The government’s instructions about surplus income are in the Superintendent’s Directive 11R2.

What can I deduct for surplus income in bankruptcy?

There are some allowable deductions this calculation 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

If my salary changes, does my calculation change?

During your bankruptcy, you will have to report your monthly income and expenses to your LIT. The LIT must perform the surplus income calculation every time your income changes while you are in bankruptcy. You must make up any extra amount required if your income rises while you are in bankruptcy.

In a debt settlement restructuring, the amount you and your creditors have agreed upon is the same amount you pay. There is no monthly reporting of your income to your LIT and no recalibration to an increased amount if your income rises. Therefore, in a consumer proposal, surplus income in bankruptcy must be considered. This is to make sure that your consumer proposal is a better alternative than bankruptcy.

What now if I have too much debt?

If you’re considering bankruptcy you need the services of a LIT. Contact Ira Smith Trustee & Receiver Inc. We provide the depth of expertise found in a large company, delivered in an informal setting. We ensure you will receive a high quality and cost-effective service.

With a joint 50+ years of experience dealing with diverse issues and complex files, the Ira Smith team delivers the highest quality of professional service. Take the first step to Starting Over, Starting Now.

THIS VLOG WAS INSPIRED IN PART BY OUR eBOOK – PERSONAL BANKRUPTCY CANADA: Not because you are a dummy, because you need to get your life back on track

 

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Gambling and Consumer Proposals Ontario: 6 Differences With Bankruptcy

Gambling and Consumer Proposals Ontario: Introduction

Gambling and Consumer Proposals Ontario are treated very differently than in a Bankruptcy in Ontario. One of the most common questions that people in difficult financial situations ask is: what’s the difference between a consumer proposal and bankruptcy?

Personal bankruptcies and consumer proposals are two of the most common solutions available for personal financial issues. While both are designed to help people resolve debt issues and give users the necessary protection from creditors, learning what’s the difference between a consumer proposal and bankruptcy can help people make more informed decisions in the future.

  1. Gambling and Consumer Proposals Ontario: Consumer Proposal debt limitation

With a consumer proposal, it is only possible for you to claim it if your total debt does not exceed $250,000, excluding the debt owing on the mortgage(s) on your home. Additionally, you must be able to repay a part of those debts to apply.

  1. Gambling and Consumer Proposals Ontario: Creditor acceptance

However, your creditors must accept your proposal, as you do not automatically earn it upon signing up for the option. With bankruptcy, however, any person who owes their creditors more than $1,000 in debt is eligible to file without the need for creditor approval.

The ideal candidates for this situation are those who need some type of immediate financial relief and whose income and budget do not allow them to pay off the reduced amount agreed to in a consumer proposal, on a monthly basis, up to a maximum of 60 months.

  1. Gambling and Consumer Proposals Ontario: Fixed consumer proposal monthly payment vs. potential variable surplus income bankruptcy payment

In order to resolve the financial issues, you and your creditors need to agree to a proposed amount with a consumer proposal, hence the name of the program. This is a monthly amount that you need to pay consistently, but it stays the same for as long as the proposal is in effect. With bankruptcy, however, monthly payments may vary based on the amount of money that you make. The more that you regularly earn, the more you need to pay per month.

  1. Gambling and Consumer Proposals Ontario: Surrendering of your assets in a bankruptcy

With a consumer proposal, you do not need to surrender your assets. With bankruptcy, however, with only certain minor exceptions, you will have to surrender your assets to your licensed insolvency trustee. The Trustee sells them and will use the money to pay for the cost of administration. The Trustee might also pay a dividend to your unsecured creditors.

  1. Gambling and Consumer Proposals Ontario: Credit rating

With a consumer proposal, your credit rating will receive an R7. This indicates you have undergone such an agreement. It will remain for up to 3 years after paying off your loans. With bankruptcy, you earn an R9 rating. That is the worst that you can have. It can stay on your report for a period of 7 years.

  1. Gambling and Consumer Proposals Ontario: Debts from an addiction

The Bankruptcy and Insolvency Act and the Superintendent of Bankruptcy, are very concerned about debts that have arisen as a result of addiction. The Licensed Insolvency Trustee must ask questions to decide if any debts have arisen as a result of addiction.

Once so determined, in a bankruptcy, the licensed insolvency trustee must oppose the bankrupt’s discharge. In order to hope to get an absolute discharge from the Court, the bankrupt will have to go into a rehabilitation program. They will need to prove they have completed a recognized program and continue to seek help. The person will also need to show they are no longer spending money on such addiction.

These are all good things for the total rehabilitation of the individual. It differs from the treatment under a consumer proposal. The licensed insolvency trustee will still want to make sure that the individual is seeking help for their addiction. If you complete your consumer proposal payments there will never be a bankruptcy. Your consumer proposal is successfully completed. You also avoid the onerous issues of discharge from bankruptcy. The treatment of gambling and consumer proposals Ontario as compared to bankruptcy is huge for the individual.

Gambling and Consumer Proposals Ontario
Gambling and Consumer Proposals Ontario

Gambling and Consumer Proposals Ontario: Are you suffering from too much debt?

If you are an individual or company who needs to free themselves from the stress and strain of too much debt, and especially if you have been told your situation is hopeless because of an addiction, Ira Smith Trustee & Receiver Inc. can prepare and carry out the plan made just for you, to free you from the burden of your financial challenges to go on to live a productive, stress-free, financially sound life.

If you’re experiencing serious debt issues for any reason, contact a professional trustee for a free, no-obligation consultation. The Ira Smith Team does not try to write new insolvency laws or tax laws. Rather, we will evaluate your situation within the existing statutes, and help you to arrive at the best possible solution for your problems, whether that solution is a bankruptcy alternative like credit counselling, debt consolidation or a consumer proposal or bankruptcy. Starting Over, Starting Now you can be debt-free with the help of a professional, licensed insolvency trustee. Contact us today.

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gambling and consumer proposals Ontario
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Brandon Blog Post

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.

If you’re considering an assignment in bankruptcy you will require the services of a licensed bankruptcy trustee. Contact Ira Smith Trustee & Receiver Inc.We provide the depth of expertise found in a large company, delivered in a boutique setting that ensures high quality and cost effective service. With a cumulative 50+ years of experience dealing with diverse issues and complex files, the Ira Smith team delivers the highest quality of professional service. Take the first step to Starting Over, Starting Now.

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Brandon Blog Post

CAN YOU REALLY HAVE SURPLUS INCOME IF YOU’RE BANKRUPT?

bankruptcy faqs, surplus income, bankruptcy, bankrupt, bankruptcy process, trustee, bankruptcy alternatives, Vaughan bankruptcy, Richmond Hill One of the things that seems to confuse many people when it comes to the bankruptcy process is “surplus income”. It’s hard to wrap yourself around the concept of surplus income when you are considering or are involved in a bankruptcy. Can you really have surplus income if you’re bankrupt?

What is surplus income? Surplus income in a bankruptcy refers to an amount that a bankrupt must pay to the Trustee monthly. It is part of the goals of the Canadian insolvency system that balances the elimination of debt with the rights of creditors to be paid. To allow Canadians to maintain a reasonable standard of living during the bankruptcy process, the government has set thresholds or guidelines on net earnings (after taxes and deductions) intended to allow a bankrupt to maintain a reasonable standard of living during the bankruptcy process. The Office of the Superintendent of Bankruptcy sets the threshold limits each year and these limits are indexed to inflation.

How are surplus income payment amounts calculated?

Surplus Income payments are calculated based on a prescribed formula set by the Federal Government and applies across Canada, with no distinction for the region a person lives in. To find out what your surplus income is, contact your Trustee.

Surplus Income thresholds are based off of nationwide “poverty line” statistics and the thresholds are fixed regardless of what the cost of living may be in your region. Although the dictionary definition of “surplus” is excess or leftover, Surplus Income has nothing to do with what you have left over every month in your budget. It is a government formula that looks at only your income, certain non-discretionary spending and your family size, and imposes a duty to make a payment to your trustee.

There are many questions people have when contemplating bankruptcy. If you are in financial distress, contact Ira Smith Trustee & Receiver Inc. We will make sure that you have a clear understanding of every step of the bankruptcy process and alternatives to bankruptcy. Also check out our bankruptcy faqs. Starting Over, Starting Now you can take your first step towards living debt free life.

Call a Trustee Now!