Surplus income when bankrupt in Canada and paying spousal and child support

Category: Bankruptcy Q&A (4) comments

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 $2,248 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 2021 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 $2,248 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.

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  1. Smith

    My ex spouse has filled bankruptcy. He is court ordered to pay child support, which he has not been paying. Do I need to file a preferred claim?

    1. J. Douglas Hoyes

      You could file a preferred claim, but child support survives a bankruptcy, so your ex-spouse will be required to make all payments for child support whether or not they are bankrupt. You could start by contacting the trustee to see if there will be any money distributed to the creditors.

  2. Amanda Clayton

    If I’m in bankruptcy and all of a sudden get child support payments how does that work we are talking about 13 yrs

    1. Ted Michalos

      13 years as a lumpsum payment? You need to contact your trustee as there are a few different options to consider. Depending on how much you owe and how much you have received it might make sense to flip your bankruptcy into a proposal. If you are receiving enough money perhaps the bankruptcy should be annulled (cancelled). If it makes more sense to complete the bankruptcy there are a couple of different ways the support may be treated – your trustee will go over all of them with you.


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