What is surplus income in bankruptcy?

In a personal bankruptcy filing, surplus income refers to the amount that your net (take-home) income exceeds the guideline amount provided by the Superintendent’s Monthly Income Standards.

Superintendent’s Monthly Income Standards

The Superintendent’s Standards are derived from the Low-Income Cutoffs which are released by Statistics Canada. The Monthly Income Standards are adjusted every year by the Office of the Superintendent of Bankruptcy, generally with slight annual increases to keep pace with higher consumer costs of living.

• The Income Standard used to calculate your surplus income requirements in bankruptcy is based on the number of people in your household.
• Other factors such as child or spousal support, out of pocket prescription or medical costs, or childcare expenses (to name a few) can affect surplus income calculations.

Surplus income calculations are used to determine:

• How long a person’s bankruptcy will last; and
• How much a person in bankruptcy needs to pay each month.

If your average surplus income exceeds $200 per month, then you will be required to remit half (50%) of the surplus income to your bankruptcy estate, and your bankruptcy will be extended from nine months to 21 months (if you’ve never filed for bankruptcy before).

If your average surplus income is less than $200 per month, then you would be eligible for an automatic discharge from bankruptcy after 9 months and will only pay the administrative cost of bankruptcy.

Example – Basic Surplus Income Calculation

A single parent with two dependents and no childcare costs, earning $4,800 net per month.

$4,800 (Income) less $4,157 (Monthly Income Standard for 2026, 3-person household) = $643.

Total Surplus Income $643 x 50% = $321.50 Monthly Surplus Income amount required to be remitted.

• If this is your first time filing bankruptcy, and your surplus income was as described above, then you would be in bankruptcy for 21 months.

Money paid into your bankruptcy as surplus income is intended to benefit your creditors, as this generally results in them receiving some return on the debts owed to them.

Surplus income can be a consideration in whether bankruptcy or a bankruptcy alternative such as a Consumer Proposal may be a better fit for your situation. It’s important to understand and explore all your options together with a Licensed Insolvency Trustee.

A Licensed Insolvency Trustee will help you estimate and compare the cost and monthly payments for different debt solutions during a free, confidential debt consultation.

See also: Do I have enough surplus income to make a Consumer Proposal to creditors?