If you feel overwhelmed by debt, there is an important update for 2025. The Office of the Superintendent of Bankruptcy (OSB) has released new surplus income limits. These limits will affect how much you need to pay if you file for bankruptcy.
Each year, these limits are adjusted to reflect changes in the cost of living. With rising prices and higher household costs, even small changes can have a big impact. This is especially true for families, seniors, and the self-employed.
So what’s changed? The income thresholds have gone up slightly. If your net monthly income exceeds the new limit for your family size, you may have to pay more into your bankruptcy. In some cases, that could also mean staying bankrupt for a longer period.
These updates are part of the OSB’s efforts to keep the system fair and ensure those who can contribute more, do. For many Canadians facing financial pressure, even small changes can affect whether bankruptcy or another option is better.
Surplus Income Limits for 2025 in Canada
What Is Surplus Income in a Bankruptcy?
Let’s keep this simple: surplus income is the money you make above a set limit,. When you file for bankruptcy in Canada, the government wants to make sure it’s fair. If you earn more than what they say you need to live on, you’re asked to share some of that extra income with your creditors.
These limits are uniform Canada-wide, and currently do not take into account whether you live in a high or low cost of living area.
Here’s how it works:
Your income – your allowed expenses (like childcare or medical bills) = your net income.
If your income is above the government’s limit for your family size, you might have to pay more each month for your bankruptcy.
2025 Surplus Income Thresholds by Family Size
The government sets different income limits depending on how many people are in your household. Here are the 2025 surplus income thresholds from the Office of the Superintendent of Bankruptcy:
| Family Size | Monthly Income Limit |
| 1 | $2,666 |
| 2 | $3,318 |
| 3 | $4,080 |
| 4 | $4,953 |
| 5 | $5,618 |
| 6 | $6,336 |
| 7 | $7,054 |
Example of a Surplus Limit for a Family
Let’s say you’re a family of 3. Your limit is $4,080 per month. If your net income is $4,580, you’re $500 over. That means you’re required to pay half of that extra ($250 per month) as a surplus income payment.
If you exceed the limit by more than $200 a month, your bankruptcy period may also be extended:
- For a first-time bankruptcy, the timeline goes from 9 months to 21 months.
- For a second bankruptcy, it goes from 24 months to 36 months.
- For a third or subsequent bankruptcy, there’s no fixed term — the initial period is generally at least 36 months, but surplus income affects how much you pay, not how long you’re bankrupt.
Of course, your income can change while you’re bankrupt. If it goes down, your payments might too. If it goes up, you could have to pay more. That’s why it’s important to talk with a Licensed Insolvency Trustee before you file, so you know exactly what to expect.
Learn more about Surplus Income >
Bankruptcy vs. Other Debt Solutions: What Are Your Options?
Top Bankruptcy Alternatives in Canada (2025)
Declaring bankruptcy isn’t your only choice. Depending on your income and situation, there may be ways to manage debt. This can help you avoid bankruptcy, which can have long-term effects. Here are the top options Canadians are turning to in 2025:
Consumer Proposal
This is a formal deal between you and your creditors including credit cards, tax debt, and other unsecured debts. You agree to pay back a portion of what you owe through affordable monthly payments, and the rest gets forgiven. It’s a legally binding debt settlement, and you get to keep your assets, like your home or car.
Debt Consolidation Loan
This option rolls all your debts into one big loan with one monthly debt repayment, usually at a lower interest rate. It works best if your credit score is still okay and you can make steady payments, and if most, or all, of your debt is with one creditor.
Informal Settlement
You (or someone helping you) contact each creditor directly to work out a deal. You might offer a smaller lump sum or ask to lower the interest rate. It’s not guaranteed, but some people make it work.
Credit Counselling
Non-profit agencies help you set up a debt management plan. You’ll still repay most or all of your debt, but in smaller chunks over time. Be careful, as these plans often cost much more in the long run than people expect. Debt management plans cannot deal with Government debt such as taxes.
Choosing the Right Alternative for Your Financial Situation
Picking a debt solution isn’t about guessing; it’s about looking at the facts.
Here are three key things to consider:
- Your income – Are you earning enough to make regular payments?
- Your assets – Do you own anything you could sell or use as leverage?
- Your credit – Is your credit score still in decent shape?
Aconsumer proposal might be a better choice than bankruptcy. This is true if you think your income will increase. It can also help you keep your assets. It tends to have less impact on your credit in the long run.
But be honest with yourself. If your income is unstable, your debt is growing, and you’ve tried other fixes, bankruptcy may be the cleanest way to move forward.
Making the Right Debt Relief Decision in 2025
Debt can feel heavy, but you don’t have to figure it out alone.
In 2025, there are more ways than ever to deal with debt. If you are considering bankruptcy or a consumer proposal, it’s important to get advice. The best first step is to talk to a Licensed Insolvency Trustee (LIT). That’s someone who’s experienced, trained, licensed by the government, and legally allowed to help you understand all your options.
At Campbell Saunders, we offer free, no-pressure consultations to walk you through what’s possible and what makes the most sense for you.
Why Sooner Is Better
The earlier you reach out, the more choices you’ll have. Waiting too long can make things harder because you might lose options, rack up more interest, or end up facing legal action. A quick conversation now can save months (or years) of stress later.
At Campbell Saunders, we believe in second chances, honest advice, and helping good people get back on track. Don’t hesitate to ask for help.
