Monthly Bankruptcy Payments in Canada: What You Pay (2026)

If you’re thinking about filing for bankruptcy in Canada, one of the first questions on your mind is probably the simplest one: how much will I have to pay each month? It’s a fair thing to want a straight answer to. The truth is, there’s no flat fee — what you pay is tied to your income, your family size, and the rules set by the federal Office of the Superintendent of Bankruptcy (OSB). For some people, the monthly cost is a few hundred dollars. For others, it’s much less or nothing at all beyond basic trustee fees.

This guide walks through how monthly bankruptcy payments actually work in Canada in 2026, what “surplus income” means, and what real households end up paying. We’ll keep it plain — no scare tactics, no upsells — so you can decide whether bankruptcy makes sense for your situation, or whether something like a consumer proposal might fit better.

Quick Answer In a Canadian bankruptcy, your monthly payment is made up of two parts: a base trustee fee (often $200–$300/month for a simple file) and a “surplus income” payment if your household earns above the federal threshold. In 2026, you pay 50% of every dollar your net household income exceeds the OSB threshold for your family size — for a single person, that threshold is around $2,500/month after tax. Many people pay only the base fee. Higher earners can pay $500–$1,500+/month.

What Monthly Bankruptcy Payments Actually Are in Canada

Canadian personal bankruptcy is governed by the federal Bankruptcy and Insolvency Act (BIA) and overseen by the Office of the Superintendent of Bankruptcy. There are no “Chapter 7” or “Chapter 13” categories here — those are American. In Canada, when you file, a Licensed Insolvency Trustee (LIT) takes over your file, sells any non-exempt assets, and your unsecured debts get discharged at the end.

What you pay monthly during the process comes from two buckets. The first is the trustee’s basic administration fee, usually $1,800–$2,200 total for a simple, no-asset file, spread across the bankruptcy term — that’s typically $200–$300 a month for nine months. The second, and the one that surprises people, is the surplus income payment.

Surplus income is the federal government’s way of saying: “If you earn comfortably above what a household needs to live on, you should contribute some of that excess back to your creditors before your debts are wiped.” The threshold is set each year by the OSB based on Statistics Canada’s Low Income Cut-Offs. According to the official Directive No. 11R2-2026 Surplus Income, the 2026 standards were adjusted upward by 2.16% from 2025 to reflect inflation. If your net monthly income exceeds the threshold for your family size by more than $200, you pay 50% of the excess each month — and your bankruptcy automatically extends from nine months to 21 months.

The Upside of Structured Monthly Payments

Predictable costYou know in advance what you’ll pay each month. No collection calls, no surprise interest, no escalation.

Income-based, not debt-basedYou don’t pay back a percentage of what you owe — you pay based on what you can afford. Owe $80k or $180k, the monthly amount is the same.

Legal protectionThe moment you file, a stay of proceedings stops wage garnishments, lawsuits, and creditor calls. Your payments replace all of that.

Clear end dateMost first-time bankruptcies end in 9 or 21 months. You see the finish line from day one.

The Downside of Monthly Payments During Bankruptcy

Pay raises increase what you oweIf your income goes up mid-bankruptcy, your surplus income payment goes up too. Bonuses, overtime, and second jobs all count.

Reporting is required monthlyYou must submit pay stubs and a budget to your trustee every month. Miss reports and your discharge can be delayed.

Longer if you earn moreSurplus income pushes a 9-month bankruptcy to 21 months — and a second bankruptcy can stretch to 36 months.

Credit damage is realAn R9 rating sits on your credit report for six years after discharge (seven in some provinces).

Who Monthly Bankruptcy Payments Fit

This approach tends to make sense if:

Your unsecured debts are large enough that even an aggressive repayment plan would take five-plus years.
Your income is modest and you have little or no surplus — meaning your monthly cost will stay close to the base fee.
You’re facing wage garnishment, a CRA freeze on your bank account, or active lawsuits and need the legal stay immediately.
You have few exempt assets to lose (no equity in a home, no expensive vehicle, no pension that exceeds limits).
A consumer proposal isn’t realistic because creditors are unlikely to accept the percentage you could offer.

Who Should Look at Another Option First

You might do better outside bankruptcy if:

You have meaningful home equity, a paid-off vehicle, or significant RESP/non-locked-in savings you want to keep — a consumer proposal protects assets that bankruptcy may not.
Your income is well above the surplus threshold. The monthly cost of bankruptcy may end up similar to or higher than a fixed-payment proposal.
You’re in a regulated profession where bankruptcy could affect your licence (financial planners, real estate agents, some legal roles).
Your debt is mostly manageable and you could clear it in 24–36 months with focused payoff strategies or credit counselling.
Most of your debt is non-dischargeable — student loans under seven years, court-ordered support, fraud-related debts.

Real Example: What Three Households Actually Pay

To make this concrete, here’s what monthly payments look like for three different family situations during a nine-month bankruptcy in 2026. Numbers are rounded and based on the OSB 2026 thresholds.

Single, $2,400 net/month income~$200 (base fee only)

Single parent, 1 child, $3,800 net~$260 (base + small surplus)

Couple, 2 kids, $7,500 combined net~$200 (no surplus — under threshold)

Single, $5,200 net/month income~$1,350 (base + significant surplus)

9-month total range$1,800–$12,000+

The single person earning $5,200 net would also see their bankruptcy extend to 21 months because surplus income exceeds $200/month — total cost would be closer to $20,000+ over the longer term.

How Your Monthly Payment Gets Calculated

Here’s the actual order of operations a Licensed Insolvency Trustee follows when figuring out your monthly amount:

You file the assignment in bankruptcy. Your trustee submits the paperwork to the OSB and the stay of proceedings kicks in. Creditors stop calling.
Your trustee reviews your household income. This means net (after-tax) income from all sources — employment, self-employment, EI, CPP, child support received — for everyone in the household.
The 2026 surplus threshold gets applied. Your family size is matched to the OSB standard. For 2026, a single person’s threshold sits near $2,500/month net; a family of four is roughly $4,650/month net.
Allowable deductions are subtracted. Child support paid, court-ordered alimony, medical expenses not covered by insurance, and a few other items reduce the surplus calculation.
The 50% rule is applied. If your net income (after deductions) exceeds the threshold by more than $200/month, you pay 50% of every dollar over the line. Less than $200 over? You owe nothing in surplus.
The trustee fee is added on. The base administration cost (typically $200–$300/month) is layered onto the surplus payment to create your total monthly figure.
You report income monthly. Each month, you send pay stubs and a budget. The trustee recalculates surplus based on actual earnings — a raise mid-bankruptcy means a higher payment.
Final reconciliation at discharge. At the end of the term, the trustee averages your income across the entire bankruptcy. If you over- or under-paid, the discharge accounts for it.

The Bottom Line Most Canadians filing a first-time bankruptcy pay between $200 and $1,500 per month, with the typical no-surplus household landing right around $200–$300. The number depends almost entirely on your household income and family size — not the size of your debt. If you’re earning close to or below the OSB threshold for your family size, bankruptcy can be a genuinely affordable path out. If you earn well above it, a consumer proposal with a fixed monthly payment often ends up costing the same or less — and it protects your credit and assets better.

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Frequently Asked Questions

What is surplus income in a Canadian bankruptcy?

Surplus income is the portion of your net household income that exceeds the federal threshold set by the Office of the Superintendent of Bankruptcy for your family size. If you earn more than that line, you pay 50 percent of every excess dollar into your bankruptcy estate each month. The 2026 numbers were updated under Directive No. 11R2-2026, with a 2.16% inflation adjustment from 2025.

Do I have to pay anything monthly if my income is below the threshold?

Yes — but only the basic trustee fee, which is typically $200 to $300 per month for the duration of your bankruptcy. There’s no surplus income payment if your net income is below the OSB threshold for your family size, or if you exceed it by less than $200/month. Many lower-income filers pay only this base fee and are discharged in nine months.

What happens to my monthly payment if I get a raise or work overtime?

Your surplus income payment will go up. Trustees recalculate each month based on your actual reported income, and they also average your income across the full bankruptcy period at discharge. A one-time bonus is averaged in, which softens the impact, but consistent overtime or a permanent raise will increase what you owe monthly. This is one reason higher earners often prefer a consumer proposal — the monthly amount is fixed at filing and doesn’t change if your income rises.

How long do I make monthly payments during bankruptcy?

For a first-time bankruptcy with no surplus income, payments run for nine months and you’re then eligible for automatic discharge. If you have surplus income above $200/month, the term automatically extends to 21 months. A second bankruptcy without surplus runs 24 months; with surplus, it runs 36 months. Third bankruptcies and beyond require a court hearing for discharge.

Is the monthly cost of bankruptcy lower than a consumer proposal?

It depends on your income and debt. If your household earns close to or below the OSB threshold for your family size, bankruptcy is usually cheaper monthly — sometimes just $200 a month. If you earn well above the threshold, a consumer proposal often ends up with a similar or lower monthly payment, and it lasts up to 60 months instead of 9 to 21, so the total dollar cost can also be similar. A free consultation with a Licensed Insolvency Trustee can run both numbers side by side using your actual income and debts.