As a personal bankruptcy trustee in Toronto, Ontario, one of the most common questions I am asked is "What does it cost to go bankrupt in Toronto?" It may surprise you to learn that the cost of bankruptcy is different in Toronto than it would be in other cities in Canada, even though the bankruptcy process is legislated by the federal government, and therefore the rules are the same for everyone in Canada.

The reason for this difference is that one of the costs of bankruptcy is the surplus income payment you must make to your trustee each month, and since residents of Toronto tend to have higher incomes than people living elsewhere in Canada, the cost of bankruptcy can be higher.

Each month that you are bankrupt you will provide proof of your income to your trustee, and if it is over the allowable limit, you are required to pay a portion of your surplus income. For example, a single person in 2007 is allowed to earn $1,797 per month after taxes. Someone who earns $1,897 in a month is $100 over the limit, so they would be required to make an extra payment of half of that amount, or $50.

That $1,797 limit for a single person (higher for families) is the same limit across Canada, so even though living costs may be higher in Toronto, you are still subject to that same limit.

In addition to this surplus income payment, most trustees will require you to make a minimum monthly payment while you are bankrupt, and you will also lose your GST refunds, tax refunds, and certain other assets while you are bankrupt.

Be sure to ask your trustee to explain in detail what it will cost you to file for bankruptcy in Toronto, and before you meet with your trustee research your options on sites like http://www.bankruptcy-toronto.ca/ that provide information on all aspects of the bankruptcy process, including a detailed discussion of the costs of bankruptcy in Toronto.