What is “Surplus Income”? How is my Income or Wages treated during Bankruptcy?

October 12, 2012 10:07 pm Published by

Surplus income, or excess income is a term referred to income earned by a bankrupt debtor above a certain minimum amount. Each month that you remain in bankruptcy your income is compared to a guideline amount set by the Office of the Superintendent of Bankruptcy (“Superintendent’s Standards”). Any income that you earn above these Standard amounts is considered “Surplus Income” and 50% of any of this surplus amount is payable to the Trustee for benefit of your creditors.

Lets go through a quick example to illustrate:

If you live by yourself, the Superintendent Standard for 1 person is $1980 per month.

If your monthly Take-home pay is $2,980, then your Excess Income would be $1,000 or

$2,980 – $1,980 = $ 1,000. What you would have to pay to the Trustee is 50% of the Excess calculated or $500

$1,000 x 50% = $500

If you have surplus income, then this is the amount you would pay to the Trustee each month that you remain in bankruptcy.

This is a key calculation as if for the first 9 months that you are in bankruptcy, if you Excess Income is beyond more that $100 for each month, on average – so $900 total over the first 9 month – then the time you have to remain in bankruptcy is automatically extended to 21 months.