2. Understand how surplus income affects your bankruptcy

The government sets guidelines for the amount of income that bankrupt people and their families can earn each month. Any money you earn that is more than the guidelines is called “surplus income”.

If you file for and your family income is above the guideline, you will need to make to the trustee. These payments will continue as long as your income is above the guideline for a maximum period of 21 months if it is your first bankruptcy, and 36 months if it is your second bankruptcy. Your surplus income payment is usually half of your family income over the guideline.

You can usually get a if all of the following are true:

  • it is your first bankruptcy
  • you are not married
  • no one objects to your bankruptcy, and
  • you meet all of your bankruptcy obligations

If your average monthly surplus income is less than $200 per month, you can be discharged in 9 months. If your average monthly surplus income is more than $200 per month, you can be discharged after 21 months.

After 7 months, your trustee will calculate your average monthly surplus income payments. For example:

Monthly Surplus Income Payment


Month 1


Month 2


Month 3


Month 4


Month 5


Month 6


Month 7


Total Surplus Income Paid




Average Surplus Income Calculation


Average surplus income payment
(Total paid / number of months)

$1573 / 7 = $224.71

Average surplus income
(average surplus income payment x 2)

$224.71 x 2 = $449.42



The calculations are more complicated if this is not your first bankruptcy. For example, someone who has filed for bankruptcy a second time and has surplus income must make surplus income payments for 36 months. Your trustee can tell you the amount of your surplus income payments and how long you will have to make those payments.

If you do not make your surplus income payments in full to the trustee, you are not likely to get an to end your bankruptcy. Instead, you will probably have to go to court. The court will then decide if they will discharge your bankruptcy, or if you must stay bankrupt longer.

You must always pay off all the surplus income you owe before you are discharged.

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