Can your surplus income change if you have a baby or get lower paying job?

  • 4 Replies
  • 440 Views
*

francaisboots

  • Newbie
  • *
  • 10
  • +0/-0
    • View Profile
Hi, I have a couple questions regarding surplus income as it looks like we will be filing in the near future.

If you were to get pregnant a few months after filing and have a baby say one year into bankruptcy (after the average surplus payments are determined), would your bankruptcy payments lower given that your income would decrease for maternity leave and the fact that your family number would increase. Or is your total bankruptcy set at the beginning and this is what you commit to paying?

Or in a regular situation if you did not have a new baby but you took a lower paying job, would your surplus income payments lower to reflect this?

One more question. If you surrender your house in a bankruptcy, do you get to keep the non exempt portion on of the equity?

Thanks!

*

NotATrust-E

  • Sr. Member
  • ****
  • 263
  • +1/-0
    • View Profile
I'll assume that you have not been previously bankrupt.

The trustee is required to determine if you have surplus income at the outset of your bankruptcy. If the trustee "Becomes aware of a material change in the bankrupt's situation", they are required to make a determination of the amount of surplus income owing, as well as in both the 8th and 20th months of bankruptcy.

If by "surrender your house" you mean return it to the mortgage lender as part of a bankruptcy process, the answer is no, you do not get to keep the equity. 

*

francaisboots

  • Newbie
  • *
  • 10
  • +0/-0
    • View Profile
Hi,
Thanks for your reply. I didn't realize they review it again in the 20th month, so that's good. And No never been bankrupt before.

Sorry, I didn't mean all the equity. I read on an Ontario forum about someone getting the "exempt" portion.. Which I believe was $10,000 there. It didn't sound like something feasible but I wasn't able to find it elsewhere.

Thanks for your reply.

I'll assume that you have not been previously bankrupt.

The trustee is required to determine if you have surplus income at the outset of your bankruptcy. If the trustee "Becomes aware of a material change in the bankrupt's situation", they are required to make a determination of the amount of surplus income owing, as well as in both the 8th and 20th months of bankruptcy.

If by "surrender your house" you mean return it to the mortgage lender as part of a bankruptcy process, the answer is no, you do not get to keep the equity.

*

NotATrust-E

  • Sr. Member
  • ****
  • 263
  • +1/-0
    • View Profile
In Ontario, there is now a $10,000 exemption for real property. What this means is that if you have $9,999 in equity in your primary residence, it is exempt and does not get distributed to your creditors. However, if you have $10,001, none is exempt. This is due to changes in the Execution Act.

When you file for bankruptcy, your property vests in the trustee. If you had less than $10,000 in equity in your house in Ontario, it would not be liquidated for distribution. However, I suspect (but do that know) that the moment you sold your house  (or gave it up and there was a surplus from the bank's sale), this is no longer exempt because it goes from being an exempt asset to an un-exempt asset (cash).

*

francaisboots

  • Newbie
  • *
  • 10
  • +0/-0
    • View Profile
In Ontario, there is now a $10,000 exemption for real property. What this means is that if you have $9,999 in equity in your primary residence, it is exempt and does not get distributed to your creditors. However, if you have $10,001, none is exempt. This is due to changes in the Execution Act.

When you file for bankruptcy, your property vests in the trustee. If you had less than $10,000 in equity in your house in Ontario, it would not be liquidated for distribution. However, I suspect (but do that know) that the moment you sold your house  (or gave it up and there was a surplus from the bank's sale), this is no longer exempt because it goes from being an exempt asset to an un-exempt asset (cash).

Thank you, that makes sense!

 

Sitemap 1 2 3 4 5