How much does it cost to go bankrupt in Ontario?

February 7, 2011

Question: How much does it cost to go bankrupt in Ontario?

Answer: The cost of bankruptcy in Ontario depends on a number of factors that are different in each situation. Here is an explanation of the different costs:

1 All trustees charge a minimum contribution for each month you are bankrupt.  The more complicated your situation, the higher the minimum contribution.  Some trustees will require an upfront contribution, and then monthly payments.

For example, your trustee may request a payment of $300 when you sign your paperwork, and then monthly payments of $200 per month for every month you are bankrupt.  Before you sign anything, be sure to ask your trustee exactly what you will be required to pay.

The minimum bankruptcy period is nine months, but if you have surplus income your bankruptcy will last longer.

2 Each month you are required to send your trustee copies of your paystubs, and proof of any other income you have.  If your income is higher than the surplus income guidelines set by the government, you are required to pay half of the amount you are over the limit.

For example, if your limit is $2,000 and you earn $2,500 in a month (after tax), you are $500 over the limit, so you would be required to make a surplus income payment of $250 for that month.

If your average income is more than $200 over the surplus income limit, your bankruptcy will be extended for one year.  This means that a first time bankrupt with surplus income would be bankrupt for 21 months (instead of the minimum 9 months).

3 You will also lose certain assets when you go bankrupt in Ontario.  For example, you will lose your tax refund for the year of bankruptcy, and for any prior years where you have not yet received your tax refund.

If you have a valuable car, or house, or other assets, you may also lose those in a bankruptcy.

Obviously the exact calculation of the cost of bankruptcy in Ontario will depend on your situation, so we recommend that you contact an Ontario bankruptcy trustee for more information.

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