When you declare bankruptcy, there are three different costs in regards to what you have to pay during the process. These costs are:
- Base Contribution
- Surplus Income
- Assets Lost
During each month of bankruptcy, you are required to pay a base contribution. The amount depends on your situation, but usually is around $200, but can increase on certain factors such as your employment status. Next, if you have income higher than the surplus income threshold set by the government, you also will have to pay a surplus amount depending on how much you make. Lastly, some of your assets may be lost during the bankruptcy process. You will lose your tax refund on your year of filing, any contributions to your RRSP, other investments you made, and the equity in your house.
It seems harsh, but the benefits of bankruptcy can outweigh the negatives, especially if you have more debt than the combined cost of what you lose. Talk to your Licensed Insolvency Trustee to see if it is the best option for you.