The most frequent question asked on this site is, “How much is my surplus income requirement?” (Surplus income is the amount of monthly income that a bankrupt must share with his creditors during the period of bankruptcy.)
To make the surplus income calculation, we need to know the after-tax income of each person in the household, because the threshhold for exempt income is for the whole household. The exempt amount differs for the number of persons in the household and is adjusted annually in late February for inflation.
For 2011, the exemption amounts (called the “Superintendent’s Standards” because they are set by the Superintendent of Bankruptcy for Canada) are as follows:
| Persons | Standard |
| 1 | $ 1,926 |
| 2 | 2,398 |
| 3 | 2,948 |
| 4 | 3,579 |
| 5 | 4,059 |
| 6 | 4,578 |
| 7+ | 5,097 |
If we take as an example a family of four with two people earning after-tax monthly incomes of $3,000 for the debtor and $3,000 for the spouse, their combined monthly net income of $6,000, less the exempt amount for a 4-person household of $3,579, leaves a monthly surplus of $2,421. This surplus must be shared with the bankruptcy estate at a rate somewhere between 50% and 75% and is further apportioned to the debtor according to the debtor’s share of the combined net income, which in this case is 50%. In the current example, 50% of the debtor’s share of the surplus income is $605.25, and 75% is $907.88. The average of these two, 62.5% or $756.56, is a good estimate of the monthly amount that may be payable over the period of bankruptcy. For a first-time bankrupt, the period is 21 months, for a second-timer, it is 36 months.
Further technical details may be found in Directive No. 11R2 issued by the Superintendent of Bankruptcy and governed by Section 68 of Canada’s Bankruptcy and Insolvency Act.
