519-646-2222HOW MUCH DOES A BANKRUPTCY COST?
Some trustees are evasive about answering this question because the answer isn’t always simple.
Many people ask that question as a prelude to deciding whether or not they will file for bankruptcy. The answer is quite a bit more complex than it might appear.
Although the Office of the Superintendent of Bankruptcy (Industry Canada) sets a tariff that caps trustee fees in some types of administration that doesn’t prevent individual trustees from setting their own fees.
The tariff simply means that if the trustee is able to collect a lot of money from surplus income or the sale of non-exempt assets (both rare situations) they can only retain a capped amount of the money collected as fees – the rest must be distributed amongst participating creditors.
Nonetheless, one trustee might set his fees at let’s say $2,000 for a simple bankruptcy while another needs (or wants) to get paid $4,000. Some larger firms have bigger advertising budgets and office overheads and like other businesses they need larger profit margins to survive.
In a situation where a bankrupt has “surplus income” – income that exceeds the poverty line (or Low Income Cut Off) they are required to contribute a portion of that “extra money” to their estate for the benefit of both the trustee and the creditors.
It is important to realize that since people’s income situations can change over the course of the bankruptcy administration the best a trustee can do is to estimate the final fees at the beginning of the administration. The final amounts payable are subject to variation through a mediation process or by court order.
For more information contact our office at 519-646-2222