Bankruptcy – Cost

What Does Bankruptcy Cost?

It’s probably the most commonly asked question about bankruptcy.

The short answer: It depends on what you own and what you earn.

What You Own

Certain assets are exempt.  Exempt assets are unaffected by bankruptcy and are not surrendered to the Trustee or seized by creditors.  In Ontario, they are:

  • Cars worth less than $6,600;
  • Furniture and appliances worth less than $13,150;
  • Necessary clothing;
  • Tools of the Trade worth less than $11,300;
  • RRSPs contributed more than 12 months ago; and
  • Insurance products where a close relative is the beneficiary.

Non-exempt assets, such as home equity, second vehicles, boats, RESPs, non-registered investments to name a few can either be surrendered to the Trustee or repurchased by the bankrupt.

For example, if you have $10,000 in home equity and declare bankruptcy you can either surrender your home to the Trustee who will sell it for you or pay the Trustee $10,000 who will distribute the proceeds to your creditors.

What You Earn

The government has an income threshold based for every size of family between 1 and 7.  In 2016, the limits are as outlined below.

Family Size 2016 Government Limit
1 $2,089
2 $2,601
3 $3,197
4 $3,882
5 $4,403
6 $4,965

If your family earns more than their limit then you are required to contribute a portion of your income to the Trustee who will distribute that Surplus Income to your creditors.

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