Who pays for bankruptcies?

_{bankruptcy payments, paying for bankruptcies, PEI}

Filing for bankruptcy in Canada means you’re mostly on the hook for the costs. These are covered by the assets in your bankruptcy estate and pay for things like trustee fees. So, creditors technically help out too. You might also make monthly payments based on surplus income and use windfalls to pay debts. Reach out via phone, text, or live chat if you have any questions. Not all trustees can be trusted.

Show Table of Contents

_{Understanding bankruptcy costs in Canada: trustee fees covered.}

Bankruptcy Payments Question

Who pays for bankruptcies? If someone files for bankruptcy, who ends up covering the costs involved?

From: Anonymous Question
Location: Charlottetown, PEI (PE)
Category: personal bankruptcy

Bankruptcy Payments Answer

In Canada, when you file for personal bankruptcy, you’re mainly responsible for the costs, which are covered through the assets you’ve listed in your bankruptcy estate. These assets help pay for things like trustee fees and other admin expenses. So, in a roundabout way, creditors are chipping in too, since they get what’s left from the estate - which is your anyways. So in short - you’re paying for it! That’s why it’s important to have the right Trustee because they advocate the creditor, not you. You might also have to make monthly payments based on your surplus income, which is determined by how much you earn and your family size. And if you happen to get any windfalls, like a tax refund or an inheritance, those can go towards paying down your debts too.

From: Insider Scott

Office of the Superintendent of Bankruptcy (OSB) Answer

The costs associated with bankruptcy are primarily covered by the individual filing for bankruptcy. According to the Bankruptcy and Insolvency Act (RSC 1985, c. B-3), specifically section 147.1, the bankrupt person is required to pay the costs of their bankruptcy administration, which includes the fees of the trustee overseeing the process. Additionally, the trustee may be entitled to specific fees outlined in Section 22 of the Act.

In terms of additional costs, Regulations under the Act (C.R.C., c. 369, and SOR/2007-256) specify the payment of costs related to the administration of the bankruptcy, which remains the responsibility of the debtor unless specifically provided otherwise.

In summary, the bankrupt individual is responsible for covering the complete costs associated with their bankruptcy process.

From: OSB Helper

Related Questions to Paying For Bankruptcies

Here are the top 5 most frequently asked questions related to who pays for bankruptcies in Canada, along with brief answers:

1. Who pays the trustee fees in a bankruptcy?

The trustee fees are paid from the funds accumulated in the bankruptcy estate, effectively by the creditors through the distribution of the bankrupt’s assets[2][5].

2. How are bankruptcy trustee fees calculated?

Trustee fees are calculated based on a percentage of the receipts from the bankrupt’s estate: 100% of the first $975, 35% up to $2,000, and 50% of receipts over $2,000[2][5].

3. What are the minimum costs to file for bankruptcy?

The minimum cost to file for bankruptcy is $2,250, payable in 9 monthly installments of $250, covering administrative costs and trustee fees[1][4].

4. Can I file for bankruptcy if I cannot afford the fee?

Yes, if you cannot afford the fee, the Office of the Superintendent of Bankruptcy (OSB) can help find a trustee who will accept a reduced fee or provide an exemption from the financial cost[4].

5. Do I have to pay additional costs during the bankruptcy process?

Yes, you may need to pay extra towards your debts if your income exceeds a certain threshold or if you receive lump sums of money during the bankruptcy process[4].

If you have a question about debt see our debt questions or ask your own debt related question.

References

_{Table of article references}