When you are struggling with the payment of your debt, the thought that you will have to pay a Licensed Insolvency Trustee to file a bankruptcy may feel overwhelming.  The fact that you will no longer be paying your unsecured debt and your creditors will cease collection efforts typically outweighs the burden of the monthly fee.

couple on laptop

The cost to file a bankruptcy depends on several factors:  if you have been bankrupt previously, your family income and size, any realizable assets and if you complete all your statutory duties on a timely basis.  The following summarizes the cost to file bankruptcy:

  • The minimum fee for a first time bankrupt with no assets and no surplus income payments who complies with all their duties is $1,800. We accept nine monthly payments of $200 per month to ensure the payments are completed prior to your eligibility for an automatic discharge.  Your income tax refund for the year of bankruptcy (and any prior year not yet received) and three of your GST cheques will also come directly to the trustee.
  • If you have been bankrupt once before, the above minimum fee is increased to $2,400 payable at twenty-four monthly payments of $100.
  • If your income exceeds a threshold set by the Superintendent of Bankruptcy and you are required to make “surplus income” payments, then the bankruptcy fees will likely be paid from these surplus income payments and you will not have to pay the above minimum fees.
  • The trustee is obligated to “realize” on any assets that you own that are not exempt or secured. “Realize” means that the trustee will either sell the asset or you can make an offer to buy the asset back from the trustee.  For example, if you have a RESP for your child with a realizable value of $2,000, the trustee can either collapse the RESP directly or you can pay the trustee $2,000 to keep it.  The bankruptcy fees above can be paid from the realization of assets and thus in this example, if you paid the trustee $2,000 to keep the RESP, that would cover the minimum bankruptcy fee.

Most trustees offer a free, initial assessment to review your financial situation in detail and explore solutions.  We will fully explain the costs of a bankruptcy and work with you for a fresh start.

If you are struggling with the payments of your debt, contact one of our Licensed Insolvency Trustees for a free, initial assessment to analyze if a bankruptcy will provide you with the relief to move forward with a fresh start.

Kathy portraitBy Kathy Lenart – Insolvency Partner, Licensed Insolvency Trustee
CPA, CA, CIRP
Member and Secretary of the Ontario Association of Insolvency
and Restructuring Professionals (OAIRP)
Canadian Association of Insolvency and Restructuring Professionals (CAIRP)