How Much Does it Cost to Declare Personal Bankruptcy?

If your finances are strained and it’s no longer possible for you to repay your debts, personal bankruptcy can be a solution that allows you to have your debts legally forgiven and give you a financial fresh start. Read on to learn how much it costs to file for bankruptcy in BC, and how monthly bankruptcy payments compare with other debt solutions.

How Do Bankruptcy Filing Fees Work? 

Declaring personal bankruptcy in Canada is done with the help of a Licensed Insolvency Trustee who will facilitate your bankruptcy’s administration and work with you throughout the process – you do not need to hire a lawyer, consultant, or other third party to work with a Licensed Insolvency Trustee. 

Although there is a cost to declare bankruptcy and work through the process, unlike professionals such as accountants and lawyers, Licensed Insolvency Trustees do not set their own rates and fees; there is no “invoice for services rendered”.

• The cost of filing for personal bankruptcy, which includes the Licensed Insolvency Trustee’s fees, and Government filing fees, are set by the Bankruptcy and Insolvency Act and these tariff-based fees are strictly regulated and monitored by the Federal Government.
• There is no cost to have a free, confidential consultation with a Licensed Insolvency Trustee to talk about your financial situation and learn about all your debt options. It should never cost you money to find out about your options to get out of debt!

How Much Will it Cost to File for Bankruptcy in BC?

Many people mistakenly believe that the cost of bankruptcy is related to the amount of debt you have – this is false. Whether you need help managing debts of $10,000 or $100,000, the tariff-based Licensed Insolvency Trustee’s fees in a personal bankruptcy are the same, regardless of the total amount of debt that you are writing off in your bankruptcy.

Because most people keep all their assets in a bankruptcy, the bankruptcy costs are paid directly by the person who is filing for bankruptcy. The costs covered in this personal bankruptcy fee include:

• The filing fee to register the bankruptcy in Canada ($86-$172)
• Costs for two financial counselling sessions done as part of the bankruptcy
• Preparation of and filing related income tax returns
• Ongoing support throughout the bankruptcy process

In most bankruptcies filed by Sands & Associates the direct cost to the person filing bankruptcy is $2,700. Usually, our Licensed Insolvency Trustees will work out a payment plan where you will pay this over the course of the nine-month period of bankruptcy.

If you’ve filed bankruptcy before the fees payable will be higher, and the length of time before you will be eligible to be discharged (released) from bankruptcy will also be longer.

Learn More About Filing a Second Bankruptcy in BC

Bankruptcy Fees VS. Surplus Income

Your monthly net (after-tax) income is the major factor that impacts both the amount of money you pay monthly in your bankruptcy, as well as how long it will take before you are discharged from bankruptcy.

While most people filing personal bankruptcy will only pay the basic bankruptcy cost over a nine month period, if your household income (net of standard deductions as well as certain additional expenses) is above a Government-set ‘superintendent’s standard’, you may be required to pay what is called ‘surplus income’.

• The income standard used to calculate surplus income varies depending on the number of people in your household and is generally adjusted each year to account for increases in cost of living.
  • There are many variables when it comes to surplus income and people often have expenses (i.e. childcare, medical costs, etc.) which can reduce how much surplus income they need to pay.
• Only 50% of surplus income (net income exceeding the superintendent’s standard) needs to be paid into your bankruptcy.
  • If surplus income is payable, the bankruptcy period will be extended from nine months to 21 months (in a first-time bankruptcy).

• Money paid as surplus income is done for the general benefit of your creditors, since this will usually mean they will receive some return on the debts that are being forgiven.
• If you have surplus income, you will not pay the standard bankruptcy fee AND your surplus income – you will pay either the bankruptcy administration fee or your surplus income, whichever is higher.

Learn More About Surplus Income in Bankruptcy

Bankruptcy may not be your only option to deal with your debt – many people are able to pay off an affordable portion of their consolidated debts and have unmanageable balances and interest forgiven by making a Consumer Proposal instead. 

• In a situation where you would be required to pay surplus income, you may choose to avoid bankruptcy altogether and file a Consumer Proposal which can allow you to consolidate and cut your debt up to 80%.

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How Does the Cost of Bankruptcy Compare to Other Debt Solutions?

If your income is relatively low and you only need to pay for the bankruptcy administration, bankruptcy can be the cheapest option to clear your debts. If you can afford to repay a portion of your debts, interest-free, a Consumer Proposal is also a low-cost way to pay off your debt.

• Your Licensed Insolvency Trustee is paid out of the monthly payment you are making; you are not required to pay a filing fee on top of your monthly bankruptcy or Consumer Proposal payment.
• You should always consult with a Licensed Insolvency Trustee to estimate monthly payments in a bankruptcy or Consumer Proposal.

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Understand Your Options with a Free Debt Consultation

Before filing for bankruptcy, you will need to connect with a Licensed Insolvency Trustee like Sands & Associates for a confidential consultation. No referral is needed – simply book your free debt consultation directly with our team.

• A Licensed Insolvency Trustee or qualified Insolvency Estate Manager will meet with you confidentially, and free of charge to discuss your unique financial situation and goals. During this meeting, they will help you understand and estimate the costs of all available debt solutions – including bankruptcy – so you can make an informed decision about your options.
• This consultation is essential because the details of bankruptcy, debt consolidation, and Consumer Proposal processes can differ significantly based on your individual circumstances. It is crucial that you get accurate information so you can make the best decision on how to move forward.

Get the facts about bankruptcy, debt consolidation, Consumer Proposals and more from a caring debt expert – book your free debt consultation with a local Sands & Associates representative today. Your financial fresh start is waiting!