Surplus income and threshold


,I am going from full time to part time work and this may mean going bankrupt.  We are currently in a proposal. We have two adult children ages 18 and 19..

Both are in full time school programmes, one is in college so only works part time. There are four in our household, my spouse works full time. My question is what is included in the calculation of surplus income in this case.

Thank you

Category: asked January 26, 2015

1 Answer


In terms of headcount, you, your spouse and your two children would be included in the calculation.

In terms of income, the income of all household members need to be included in the surplus income calculation. To be more specific, if you are including them in the headcount, then you need to include their income.

However, the resulting household surplus income must be prorated by your share of the household income. This will result in your surplus income. You are required to pay 50% of your surplus income.

The above calculation is performed every month that you are in bankruptcy. If you are a first time bankrupt and have surplus income, your bankruptcy will last for 21 months.

Here’s an example to illustrate:

Your net monthly income: $1,500

Your spouse’s net monthly income: $3,000

Your child’s net monthly income: $1,000

Total family net monthly income: $5,500 (i.e., $1,500 + $3,000 + $1,000)

Standards for household of four: $3,743

Household surplus income is therefore $1,757 ($5,500 – $3,743). However, your share of the household surplus income is $1,500/$5,500 x $1,757 = $479.18. That is your surplus income is $479.18. You are required to pay 50% of this, so you would pay to the trustee $239.59.