Cost of a Bankruptcy.

trustees1200x566Cost of a Bankruptcy.

Bankruptcy Costs – Cost of a Bankruptcy and a Consumer Proposal.

Cost of a Bankruptcy:

The cost of a bankruptcy is regulated by the Office of the Superintendent of Bankruptcy, the federal government agency that oversees insolvencies across Canada.

Bankruptcy costs are adjusted each year to account for the cost of living.   The costs are set, taking into consideration the family situation, including the number of dependents.   The philosophy is that the bankrupt and his family are left enough to provide the necessities of life, and once those are provided to provide funds to repay something to the creditors.

The minimum cost of a bankruptcy is $1,800, which can be paid over nine months.  Payments are made each month so long as the person is in bankruptcy.
In the vast majority of cases the person is out of bankruptcy in nine months and will have to pay $1,800.

Bankruptcy Discharge Rules (How long a person will be in bankruptcy.):

– 9 month automatic discharge for first time bankrupts who fulfill all their duties and who do not have excess income. (Required monthly payment of less than $100.00 per month)

– 21 months (or more at the court’s discretion) for first time bankrupts who fulfill all their duties. and who have excess income. (Required monthly payment of $100.00 per month or greater)

-24 months for second time bankrupts who do not have excess income.(Required monthly payment of less than $100.00 per month)

-36 months for second time bankrupts who have excess income. (Required monthly payment of $100.00 per month or greater)

-Bankrupts with personal income tax debt of $200,000.00 or more representing 75 percent or more of total unsecured claims, are not eligible for an automatic discharge. They must go to court for an adjudication.

The latest costs were published by the Office of the Superintendent of bankruptcy on March 2, 2016.

(50% of the values in the cells are the required monthly payments, when the bankrupt does not have a spouse or other family member contributing to the family income.)

Appendix A

Surplus Income Standards

(A minimum of approximately $200.00 a month for nine months is required to cover Bankruptcy Estate costs.)

Superintendent’s Standards – 2015/16

Example (Family unit of 2):

Bankrupt’s available monthly income: $2,800
Other family unit member’s available monthly income: $1,000


Family unit’s available monthly income: $3,800
Minus the Superintendent’s standard for a family unit of 2 as per Appendix A: $2,601


Total monthly surplus income $1,233
Bankrupt’s portion of the family unit’s monthly income
(2,800 ÷ 3,800 = 73.68 %)
$883.42
Payment required from bankrupt, as per paragraph 7(2)(a) of the Directive
$883.42 × 50 % = 454.24
$441.71

Cost of a Consumer Proposal:

The cost of a Consumer Proposal is regulated by the federal government and comes out of the payments made under the consumer proposal.


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