Hello,
The money you may be entitled to receive from workers compensation for your injury is not considered property and on this basis it would not be taken by the Trustee. Each month that you are in bankruptcy you are obligated to complete a statement of your income and expenses. In doing so, you would record the workers compensation payment as income in the month in which it is received.
Depending on the size of the payment, it may place you in a situation where you have something called “surplus income.” While there is no limitation on how much money you can earn while in bankruptcy, there are surplus income guidelines established by the Superintendent of Bankruptcy under which an individual is required to pay into their bankruptcy estate a percentage of their income that is above the guideline or threshold. For example, the standard guideline for a household of one is currently $1,870 and the guideline for a household of two is $2,328. These amounts are net of tax deductions. Surplus income may also be reduced by certain non-discretionary expenses such as child support, alimony, health-related expenses, fines or penalties, and certain employment-related expenses (e.g. a truck driver’s meals on the road). Discretionary expenses such as groceries, rent/mortgage, utilities etc. are not applicable in calculating the amount of surplus income.
For example, an individual earning $2,700 (net) per month as a household of one and paying child support of $200 per month would have a surplus income payment of $315 (i.e. $2,700 minus $200 for non-discretionary expense = $2,500 minus $1,870 standard guideline = $630 multiplied by 50% = $315.)
For more information contact an MNP Trustee in your area.
Brad Milne
Trustee in Bankruptcy
Brandon, Manitoba
