When you meet with a Licensed Insolvency Trustee (LIT) to review your situation and your options, the bankruptcy process results in the least amount you pay and is usually the fastest way to deal with your debt. The other options are designed to pay the creditors in full over time or pay them MORE than what they will get paid if you used bankruptcy.

The LIT reviews what you have in assets and advises what you are allowed to keep according to provincial and federal law regarding protected assets, and which assets (if any) the LIT is obligated to take and sell. You may be able to arrange to make payments over time for the assets the LIT has to take and sell instead of the LIT selling them.

There may also be an amount you have to pay based on your income sometimes described as Surplus Income Guidelines ( the “SIG”) that is a calculation of what you have to pay to the LIT from your net monthly income. This calculation takes into account your monthly income, the number of people in your household, the income of others in the household, and some types of expenses that are considered so necessary that they are subtracted from your income to reduce the surplus. Here is an example of this calculation based on certain facts;

Your net pay from employer monthly                 $3,800/month

3 people in the household, including your spouse who is a homemaker with no income, and 1 young child

Regular prescription medicine costs $150/month with no insurance recovery


$3,800   your net pay

-$3,246   which is a set deduction amount for a household of 3 people(2017 figures)

-$150   the medical expense which is a type of expense considered necessary

$404   your surplus income

X ½    the SIG says you pay half of the surplus to your LIT for creditors

$202   the amount you are obligated to pay from your income to the LIT for the month

If you are bankrupt for the first time, the surplus payment is made for 21 months. The amount you pay each month may vary if your income, number in the household, and other factors change. A LIT in your area will be able to assist you in estimating this amount based on your situation.