What Can I Keep If I File Bankruptcy

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One of the questions that I am often asked is what property can I keep? This is a great question, and one that is often the source of much information. In determining what property a person can keep it is important to consider the Federal Bankruptcy & Insolvency Act, the Insurance Act and the Provincial Executions Act. All of these must be considered because the Bankruptcy & Insolvency Act recognizes any property that a province considers exempt. Therefore there are provincial differences.

Upon making the assignment into bankruptcy, all unencumbered assets (those with no liens registered against them) vest in the Trustee, subject to certain Federal and Provincial legislation. Some of the more common assets and how they are dealt with in the bankruptcy are as follows:

Employer Pension Plans - most employer pension plans are exempt from seizure as they are protected under Provincial legislation.

RRSP's - when registered with a life insurance company are exempt from seizure by the Trustee pursuant to Provincial legislation. A self-directed RRSP that is registered with a non-life insurance company or bank etc. are exempt pursuant to Act with the exception of any contributions made to the plan within the 12 months prior to the assignment.

RESP's - pursuant to case law, RESP’s are considered an asset in your bankruptcy under certain situations, and any balance less the Government grant portion may be seized by the Trustee. Your Trustee will discuss this in further detail with you during the initial consultation.

Stocks and Bonds - Any stocks and bonds held including Canada Savings bonds and any shares that are publicly traded are assets that would vest in the Trustee.

Life Insurance Policies - Life insurance policies are exempt from seizure as they are protected by Provincial legislation, providing the named beneficiary is within the protected class designation. Those beneficiaries that would be included in this class are: spouse, child, parent, grandchild, common-law opposite-sex spouse, or common-law same-sex-partner.

Personal Effects - Necessary and ordinary clothing of the debtor and his or her family are exempt from seizure as they are protected by Provincial legislation. The maximum value of the personal effects covered by the exemption would be $5,650.00.

Furniture - The household furniture that are contained in and form part of the home of the debtor are exempt from seizure as they are protected by the Provincial legislation. The maximum value of the furniture covered by the exemption would be $11,300.00.

Tools of the Trade - Tools and other personal property of the debtor, used to earn income from the debtor’s occupation, are exempt from seizure as they are protected by Provincial legislation. The maximum value of the tools of the trade covered by the exemption would be $11,300.00.

Automobiles - Each bankrupt is afforded an exemption under Provincial legislation for one unencumbered motor vehicle with a value not exceeding $5,650.00.

House Equity - Currently, any equity in your personal residence would be considered an asset of the debtor and would therefore vest in the trustee for the benefit of the creditors. At this time it is anticipated that a change in the Provincial legislation will likely exempt a certain value of your home. This site will be revised when the amount is known.

Other Assets - All recreational equipment, including but not limited to boats, trailers, and snowmobiles are not afforded any exemption under Provincial legislation and would therefore vest in the Trustee.