Filing for bankruptcy can be a really difficult decision, which is why it's important to know all of the costs associated with the filing. You'll have to pay court fees and credit counseling if you want help getting your financial situation under control.
How much does it cost to declare bankruptcy?
The bankruptcy cost varies greatly depending on an individual's situation. This is because it depends on financial assets and debts and personal information such as age or family size.
The most important factor is the amount of debt that you have. If you have a lot of debt, then it will likely cost more to go bankrupt. Other factors that can affect the cost of bankruptcy include whether or not you own your home, how much equity you have in your home, and what kind of income you have. These factors will likely determine how much time will be needed for repayment after discharge from the court proceedings.
Generally speaking, the bankruptcy cost in Canada is somewhere between $1,500 and $5,000. This includes both the filing fee and the trustee's fees. However, if you have a lot of debt, it could cost more than this. So as for the exact bankruptcy cost—no one can really tell.
If you are thinking about filing for bankruptcy, it is important to speak with a licensed insolvency trustee like Risman Zysman Inc. We will be able to give you a more accurate estimate of the cost of bankruptcy in Canada based on your individual situation.
Our team can discuss everything you need to know about filing bankruptcy in Canada during counselling sessions. This will help you make more informed decisions.
Minimum Monthly Bankruptcy Contribution
The minimum monthly bankruptcy contribution is the smallest amount of money that you can pay each month towards your debts during bankruptcy. The calculation is based on your family size and total monthly income, minus certain allowable expenses.
Your trustee will use a budget to determine your minimum monthly contribution. The budget takes into account your basic living expenses, such as food, shelter and clothing. It also includes other necessary expenses, such as transportation and child care.
For a first-time bankruptcy filer in Canada, the minimum fee for declaring bankruptcy is around $1,800, payable monthly in instalments of $200 in 9 months.
Surplus Income Rule Can Increase Payments
The higher the amount of money you earn, the higher your surplus income payment should be! This is the idea of the surplus income rule in Canada.
The government has created a system to ensure that people who are struggling financially maintain at least the standards of living in Canada. Say, for instance, if you make more than $200 above your monthly income, then 50% will go towards paying off what's extra and subjecting to what is called surplus income payment.
You May Lose Some Assets In A Bankruptcy
One of the most difficult things about bankruptcy is dealing with the loss of assets. You may not be able to keep your home or car, and you may also lose other valuable belongings. This can be a difficult adjustment, but it's important to remember that you're starting fresh and you'll be able to rebuild your life after bankruptcy. It's also important to understand that not all assets are lost in a bankruptcy.
Depending on the type of bankruptcy one files, there are different rules regarding what assets must be surrendered. Generally, however, one must surrender most if not all of their assets to have their debt forgiven.
The following is a list of some common assets that must be surrendered in bankruptcy proceedings:
- Equity of the house that’s more than $10,000
- Investments
- Tax refunds (the entire year you're bankrupt and years you haven’t filed for bankruptcy)
- Car value without loans
- RRSP contributions made a year before filing a bankruptcy
The bankruptcy trustee has a very important job - they need to realize your assets, which means turn them into cash. The trustee isn't required to seize all of your belongings and sell them; instead, just the money to make sure everyone gets paid out after everything is settled with creditors (and if there are any leftovers).
So, for example in the past year, you have contributed $2000 to your RSSP, then you could make an offer and pay $2000 to your trustee so you can keep your retirement funds and other RRSPs and assets. Your creditor and trustee then take the cash.
If you are concerned about your investments, assets, and income, you can ask for professional help from Risman Zysman Inc. Our trustee can create a financial plan to keep your assets intact.
What Are Bankruptcy Trustee Fees?
Bankruptcy trustee fees are the fees charged by a bankruptcy trustee to administer a bankruptcy case. The fee is usually a percentage of the total amount of debt that is being discharged in the bankruptcy case.
The bankruptcy trustee reviews the debtor's financial situation and determines which debts can be discharged in the bankruptcy case. The trustee also collects and disburses payments from the debtor to the creditors, and oversees the distribution of any assets that are available to repay the creditors.
The cost of a bankruptcy trustee in Canada varies depending on the province you reside in. Generally, the fee is based on a percentage of your assets. For example, in Ontario, the fee ranges from 2.5% to 4%, while in Nova Scotia it ranges from 5% to 10%. Trustees also charge an hourly rate for services rendered in excess of two hours.
Get A Free Estimate
Avoid bankruptcy! Seek professional help from Risman Zysman. Our team of licensed insolvency trustees are committed to providing the best financial advice to resolve your debts and prevent any chances of bankruptcy as much as possible. We offer a free consultation to help you understand all your options. If bankruptcy is the best solution for your case, you can also count on us for professional assistance.
When you contact us, we will review your current financial situation, discuss all your options with you, help you develop a plan to get out of debt and provide ongoing support and advice.
Call us at (416) 222-4600 to schedule an appointment!