What is surplus income in a Canadian bankruptcy?
Surplus income is the amount your net monthly income exceeds the Superintendent of Bankruptcy's standard threshold for your family size. You must pay 50% of the surplus to your trustee each month throughout the bankruptcy. If your surplus income exceeds $200/month, your bankruptcy is extended: a first-time bankrupt with surplus income must remain bankrupt for 21 months rather than 9. The threshold is set annually and adjusted for inflation.
What is the difference between bankruptcy and a consumer proposal?
Bankruptcy eliminates all eligible unsecured debt but requires you to surrender non-exempt assets and pay surplus income for 9–21 months. It stays on your credit bureau for 6–7 years. A consumer proposal offers creditors a lump sum or monthly payments (up to 5 years) equal to more than they would receive in bankruptcy. You keep all assets. It stays on your credit for 3 years after completion. A proposal is generally preferred when you have significant equity or high surplus income.
What debts survive a Canadian bankruptcy?
Debts that are NOT discharged in bankruptcy: student loans if you stopped being a student less than 7 years ago, alimony and child support, fines and penalties imposed by a court, debts arising from fraud or misrepresentation, and civil damages for intentional bodily harm or sexual assault. All other unsecured debts — credit cards, lines of credit, personal loans, payday loans, CRA tax debt (except fraud) — are discharged.