If you are a high income earner and therefore would have surplus income if you filed personal bankruptcy, it is probably a better idea to consider making a consumer proposal.
This is because if you have surplus income and you file personal bankruptcy your bankruptcy process will be longer and you will be required to submit monthly surplus income reports. A first-time bankrupt with surplus income is not eligible for an automatic discharge for 24 months and a second-time bankrupt with surplus income is not eligible for an automatic discharge for 36 months. Also, surplus income payments are adjusted based on your actual monthly income after filing personal bankruptcy. This means that if you receive a bonus, raise, extra overtime, job change or other increase in income after filing personal bankruptcy your monthly surplus income payments will increase. When you file a consumer proposal you are not required to report your monthly income after filing and your monthly payments are unaffected by increases in your income. Regardless of how much your income may increase after filing a consumer proposal your creditors cannot come back and request an increase in your proposal payments.
-Chris Welker
