When you file for bankruptcy, one of your required duties will be to keep track of your monthly income and expenses during the period that you’re bankrupt. Your trustee will give you the forms for doing this, and each month, you’ll pass the information (including copies of your pay stubs and proof of any other income) along to him/her. Your trustee will then use that information to decide whether you need to make a surplus income payment to your creditors.
Surplus income payment calculations are based on both your income and your family size. Because the payments are calculated on a monthly basis, it stands to reason that any changes to your income will have an impact on the calculations. If you’ve been paying surplus income and lose your job, for instance, your required payment will likely decrease. Likewise, if your income rises, perhaps because of a raise or a new job, your surplus income payments will most likely increase as well. For those people who earn commissions in their work, the payments may fluctuate according to each month’s income.
While all this reporting may seem like a lot of work, remember that it plays an important role beyond determining how much you have to pay to your creditors. By being forced to keep track of your income and expenses, you’ll gain valuable insight into your spending habits, which can help you to better manage your finances (and avoid future difficulties) once your bankruptcy is complete.
To find out more about how a change in your income might affect you in bankruptcy, call today for a free, no-obligation consultation with one of our insolvency experts: in Ottawa call 613-237-5555; out of town, call toll-free 1-800-517-9926 or book online.