Note: the question in this article contains old surplus income limits. Click here to review the updated limits.
Question: My income is $3200 take home per month, I am separated from my wife but I pay her $500 per month spousal support and $815 per month in child support, how would the surplus income work for this situation? Are they my dependants? or is my threshold still $2,243 for a single person?
Answer: Since the children and your ex-wife are not living with you, they are not considered dependants for the purpose of calculating surplus income while bankrupt in Canada.
However, the amount you pay in court ordered child support and spousal support is used to reduce your net income.
In your example, using the 2020 surplus income threshold numbers, your trustee would take your take home pay of $3,200 per month and deduct the spousal support of $500 and the child support of $815 that you pay each month, for a net income of $1,885.
Since $1,885 is below the threshold of $2,243 for a single person, you would not be required to make surplus income payments.
NOTE: Each month that you are bankrupt you are required to submit proof of your monthly income (your paystubs), and proof that you have paid your spousal and child support (unless it is deducted directly from your paycheque; if not, proof of payment in the form of a receipt from your ex-wife or some other proof would be required). Based on that proof each month your trustee calculates your average net income for surplus income purposes, and determines the amount you are required to pay. If you don’t submit proof of support payments, you don’t get the deductions from your income.