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Child SUpport and Insolvency
If you are drowning in debt and struggling to make payments then an insolvency filing may be the answer. Most Bankruptcy Trustees provide free consultations, where they can inform you about your options and help you decide whether a bankruptcy or consumer proposal is right for you. However it is important to realise that not all kinds of debts will be covered by an insolvency filing. Support payments will not be erased by a bankruptcy and must still be paid during and after the term of your insolvency.
So how do you factor your support payments into your bankruptcy?
The Office of the Superintendent of Bankruptcy sets out a minimum required living allowance by family size.
This amount covers basic costs of living. Non-discretionary expenses, which include things like child care, medical expenses and support payments, can be added on to this number. Half of all money earned over the allowance that is not spent on non-discretionary expenses must be remitted to the trustee.
In other words your support payments take priority over your creditors. If your support payments were mandated by court order then the amount is fixed and cannot be affected by your filing. However if you merely have an agreement with your ex that has not been sanctioned by a court then the amount of support you can claim as a non-discretionary expense is at the discretion of your trustee.
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