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Surplus income is a calculation in bankruptcy used to determine:

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

Surplus income is the amount that your net income exceeds the guidelines amount provided by the Superintendent’s Monthly Income Standards.*(see below for more information on this guideline amount)

If your average surplus income exceeds $200 per month, then you will be required to remit half the surplus income to your bankruptcy estate for the general benefit of your creditors. If your average surplus income was less than $200 per month, then you would be eligible for an automatic discharge from bankruptcy after 9 months.

A basic example of surplus income calculation:

A single parent with two dependents and no childcare costs, earning $4,500 net per month.

$4,500 (Income) less $3,995 (Monthly Income Standard for 2024, 3-person household) = $505.
Total Surplus Income $505 x 50% = $252.50 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.

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, contact a Licensed Insolvency Trustee to learn more.

*Where do the Superintendent’s Monthly Income Standards come from?
The Superintendent’s Standards are derived from the Low Income Cutoffs which are released by Statistics Canada. These Standards are adjusted every year by the Office of the Superintendent of Bankruptcy. Generally the updated Standards are slightly increased annually to meet the expectation of higher consumer costs of living.

Surplus income can be a determining factor in whether bankruptcy or a bankruptcy alternative such as a Consumer Proposal are a good fit for a specific situation.

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