Assets You Can Keep in Bankruptcy in Canada

Safeguarding Your Belongings: Understanding What Assets You Can Retain in Bankruptcy

The process of declaring bankruptcy is daunting, often shadowed by the fear of losing everything you own. However, it’s important to understand that not all your assets are at risk. Depending on your province, specific belongings can be protected even during bankruptcy. In this article, we’ll delve into the details of what Assets You Can Keep in Bankruptcy in Canada, province by province.

A General Overview of Protected Assets

There are several categories of possessions that, generally, you can maintain in bankruptcy across all provinces and territories in Canada. These include:

1. Registered Retirement Savings Plans (RRSPs), except contributions made to RRSPs in the 12 months before bankruptcy.
2. Life insurance policies with a beneficiary being a spouse, child, parent, or grandchild.
3. Most pension plans.

To understand more about safeguarding your assets during bankruptcy, consider scheduling a free consultation with a Licensed Insolvency Trustee via this link.

Here’s a brief video explaining what assets you can and can’t keep during bankruptcy:

Video transcript: Most people fear that they will lose everything in bankruptcy, but that’s not the case. There are exempt assets that you can keep, and your creditors can’t seize. These are governed by provincial rules. Hence, you can continue paying your mortgage and vehicle. You won’t lose everything. If you have certain non-exempt assets, you’ll need to give these to the trustee. Consider this as a settlement or a token amount you’re offering to the creditors in exchange for eliminating the debt.

Retaining Your Income During Bankruptcy

When you declare bankruptcy, a portion of your income may be payable to the Licensed Insolvency Trustee for all creditors’ benefit. The exact amount depends on:

• The family unit’s take-home pay.
• The number of people in the family.
• Non-discretionary expenses like child care or child support.

To get your questions about surplus income answered, you can schedule an initial consultation.

Keeping Your Vehicle During Bankruptcy

If you can continue making loan payments during bankruptcy, you may be able to keep your vehicle. However, your bankruptcy doesn’t stop your car from being repossessed if you can’t make the payments.

If your vehicle’s value exceeds your province’s exemption limit, there’s a “buy-back” option. You can arrange to pay the amount that exceeds the exemption limit with your trustee.

Home Maintenance During Bankruptcy

You may be able to keep your home if you continue making your mortgage payments. Additionally, if your home equity falls within your province’s exemption limits, your trustee will “disclaim” any rights to it.

Home equity is determined by subtracting the mortgage and property taxes from the asset’s value. If that amount exceeds the exemption limit, you might be required to pay that value to keep your home. If the home equity amount significantly exceeds the exemption amount, homeowners might consider using this to pay off creditors. Hence, it’s vital to learn about the asset exemption limits in your province.

Province-specific Guidelines on Retaining Assets in Bankruptcy

Bankruptcy laws and exemptions vary across provinces. Let’s delve into the specifics of what assets you can keep in bankruptcy in each province.

Alberta

Under the Civil Enforcement Act in Alberta, you’re generally able to retain the following:

• Food for you and your dependents for the next 12 months
• Necessary clothing up to $4,000 in value
• Household furnishings and appliances up to $4,000 in value
• One motor vehicle not exceeding $5,000 in equity
• Medical and dental aids for you and your dependents
• Equity in your primary residence, including a mobile home, up to $40,000
• Personal property (tools, equipment, books) needed for your profession, up to $10,000 in value
• Social allowance, disability benefit, or a widow’s pension if not mixed with other funds
• Life insurance policies and pension plans
• RRSPs, except contributions made during the 12 months before bankruptcy

For more details, consider booking a free consultation with a Licensed Insolvency Trustee.

British Columbia

In British Columbia, you can generally keep:

• Equity in a home in Greater Vancouver and Victoria up to $12,000. In the rest of the province, up to $9,000
• Equity in household items up to $4,000
• Equity in a vehicle up to $5,000
• Work tools up to $10,000 in value
• Essential clothing and health aids of unlimited value
• RRSPs, except contributions made during the 12 months before bankruptcy

For more details, consider booking a free consultation with a Licensed Insolvency Trustee.

Saskatchewan

In Saskatchewan, you can generally keep:

• RRSPs, except contributions made during the 12 months before bankruptcy

For Non-Farmers:

• Household furniture and personal effects up to $4,500 per person
• Tools of the trade up to $4,500 in value
• A motor vehicle, if required for employment
• $32,000 equity in your home ($64,000 if jointly owned)
• Certain life insurance policies
• Certain pensions
• Necessary and ordinary clothing of the family
• The books of a professional person
• The trailer or portable shack occupied by the debtor as living quarters
• RRSPs, RRIFs and DPSPs are exempt from seizure

For Farmers:

• Furniture, furnishings and appliances up to $10,000 in value
• The cash equivalent of produce sufficient to provide food and fuel for heating until the next harvest
• All livestock, farm machinery and equipment, including one car or truck, necessary for the next twelve months operations
• One motor vehicle, if required for business or profession, but not in addition to the one above
• Tools and equipment up to $4,500 used by a farmer in their trade or profession
• Equity in a personal residence to a value of $32,000 ($64,000 if jointly owned)
• Seed grain equal to two bushels per acre of land under cultivation
• Cash equivalent of crop equal to:
  • unpaid harvesting costs
  • living expenses to next harvest
  • necessary costs of farming until next harvest
• The homestead provided it is not more than 160 acres
• Any trailer that is occupied by the farmer as living quarters and not in addition to the house and buildings already exempt
• RRSPs, RRIFs and DPSPs are exempt from seizure
• Certain life insurance policies
• Certain pensions

For more details, consider booking a free consultation with a Licensed Insolvency Trustee.

Manitoba

In Manitoba, you can generally keep:

• Furniture, household furnishings and appliances not exceeding the total value of $4,500
• Necessary and ordinary clothing of the debtor and family
• Food and fuel necessary to the family for a period of six months or cash equivalent
• If the debtor is a farmer:
  • animals necessary for farming operation for 12 months
  • farm machinery, dairy utensils and farm equipment necessary for ensuring 12 months
  • one motor vehicle if required for purposes of agricultural operations
  • Home quarter
• Tools, implements, professional books and other necessaries not exceeding a total value of $7,500 used in the practice of the trade, occupation or profession
• One motor vehicle, if necessary for work or transportation to and from work, not exceeding $3,000 in value
• Articles and furniture necessary to the performance of religious services
• Seed sufficient to seed all land of the debtor under cultivation
• Health aids, including wheelchair, air conditioner, elevator, hearing aid, eyeglasses, prosthetic or orthopedic equipment, necessary to debtor or family
• Chattel property of municipalities and schools
• Actual residence of the bankrupt, equity of $1,500 each if in joint tenancy or tenancy in common, or $2,500 if not in joint tenancy
• RRSPs, Registered Retirement Income Funds (RRIFs) and Deferred Profit Sharing Plans (DPSPs)
• Registered Retirement Savings Plans (RRSPs) are exempt from seizure with the exception of any contributions made to RRSPs during the 12 month period prior to the date of bankruptcy

For more details, consider booking a free consultation with a Licensed Insolvency Trustee.

Ontario

In Ontario, you can generally keep:

• Principal residence, if it has less than $10,000 of equity in it
• Clothing and personal effects up to a value of $5,650.00
• Household furniture and appliances up to a value of $13,150.00
• Motor Vehicle up to a value of $6,600.00
• Tools of the Trade up to a value of $11,300.00
• Farmers
  • The livestock, fowl, bees, books, tools and implements and other chattels ordinarily used by the debtor in the debtor’s business or calling not exceeding $28,300 in value
  • Sufficient seed to seed all the person’s land under cultivation, not exceeding 100 acres
  • Fourteen bushels of potatoes
  • Where seizure is made between the October 1st and the April 30th, such food and bedding as are necessary to feed and bed the exempt livestock and fowl until the following April 30th
• Registered Retirement Savings Plans (RRSPs) are exempt from seizure with the exception of any contributions made to RRSPs during the 12 month period prior to the date of bankruptcy

For more details, consider booking a free consultation with a Licensed Insolvency Trustee.

Quebec

In Quebec, you can generally keep:

• The movable property which furnishes their main residence, used by and necessary for the life of the household, up to a market value of $6,000 established by the seizing officer
• The food, fuel, linens and clothing necessary for the life of the household
• The instruments of work needed for the personal exercise of their professional activity
• Family papers and portraits, medals and other decorations
• Property declared by a donor or a testament to be exempt from seizure except in certain cases
• Judicially awarded support and sums given or bequeathed as support
• Benefits payable under a supplemental pension plan to which an employer contributes on behalf of their employees, other amounts declared unseizable by an Act governing such plans and contributions paid or to be paid into such plans
• Periodic disability benefits and expense reimbursements under a contract of accident and sickness insurance
• Property of a person that he requires to compensate for a disability
• A certain portion of salaries and wages based on the number of dependents
• Consecrated vessels and things used for religious worship
• Employer contributions to pension, insurance or social welfare funds;
• The value of the food and lodging supplied or paid for by the employer on the occasion of travelling while carrying out work
• Passes given by a transportation undertaking to an employer’s employees
• Registered Retirement Savings Plans (RRSPs) are exempt from seizure with the exception of any contributions made to RRSPs during the 12 month period prior to the date of bankruptcy

For more details, consider booking a free consultation with a Licensed Insolvency Trustee. However, the property in the first and third items above may be seized and sold by a creditor holding a hypothec on it.

New Brunswick

In New Brunswick, you can generally keep:

• Household furniture, appliances and utensils
• Food, clothing and home heating fuel
• One motor vehicle suitable for highway use
• Tools and equipment used in the practice of their profession or occupation
• Necessary medical and dental aids
• Household pets
• Pension plans, Registered Retirement Savings Plans (RRSPs), Registered Disability Savings Plans (RDSPs) and Registered Retirement Income Funds (RRIFs)

For more details, consider booking a free consultation with a Licensed Insolvency Trustee.

Newfoundland and Labrador

In Newfoundland and Labrador, you can generally keep:

• Food required by debtor and dependents during the next 12 months
• Medical and dental aids required by debtor and dependents
• Domesticated animals which are kept as pets and not used for business purposes
• Fuel or heating as a necessity for the debtor and their dependents
• Clothing of the debtor and their dependents, of a value totalling $4,000
• Appliances and household furnishings (which are defined as washing machine, clothes dryer, “reasonably necessary” bedroom suites and bedding, oven and stove top burners, “necessary” dishes and kitchen utensils, and “necessary” strollers, cribs and highchairs), of a value totalling $4,000
• A motor vehicle of the debtor, value totalling $2,000
• Items of sentimental value to the debtor, a value totalling $500
• The debtor’s equity in their principal residence, $10,000
• Personal property used by and necessary for the debtor to earn income from occupation, trade, business or calling, $10,000
• RRSPs, Registered Retirement Income Funds (RRIFs) and Deferred Profit Sharing Plans (DPSPs)
• Should the debtor’s primary occupation is farming, personal property, including agricultural products, ordinarily used by and necessary for the debtor to earn income from farming, to a value not exceeding $10,000
• Where the debtor’s primary occupation is fishing, personal property ordinarily used by and necessary for the debtor to earn income from fishing to a value not exceeding $10,000
• Where the debtor’s primary occupation is aquaculture, personal property ordinarily used by and necessary for the debtor to earn income from aquaculture to a value not exceeding $10,000
• Registered Retirement Savings Plans (RRSPs) are exempt from seizure with the exception of any contributions made to RRSPs during the 12 month period prior to the date of bankruptcy

For more details, consider booking a free consultation with a Licensed Insolvency Trustee.

Nova Scotia

In Nova Scotia, you can generally keep:

• Reasonably necessary wearing apparel, household furnishings and furniture
• Necessary fuel and food
• Necessary grain, seeds, cattle, hogs, fowl, sheep and other livestock for the domestic use of the debtor and their family
• Medical and health aids
• Farm equipment, fishing nets, tools and implements used in debtor’s chief occupation, not exceeding $7,500
• Motor vehicle not exceeding $6,500 in value

For more details, consider booking a free consultation with a Licensed Insolvency Trustee.

Prince Edward Island

In Prince Edward Island, you can generally keep:

• The necessary and ordinary clothing of the debtor and their family
• Any motor vehicle owned by the debtor not exceeding $3,000 in value if not required for employment, and $6,500 if required to retain employment or for transportation to a place of employment where public transportation facilities are not reasonably available.
• The household furniture, utensils, equipment, food and fuel that are contained in and form part of the permanent home of the debtor, not exceeding $5,000 in value
• Registered Retirement Income Funds (RRIFs)
• RRSP’s are exempt (no limit) provided they have a defined beneficiary which is a specific member of the direct family
• In the case of a debtor other than a farmer, tools, instruments and other chattels ordinarily used by the debtor in their business, trade or calling, not exceeding $2,000 in value
• In the case of a debtor who is a farmer:
  • livestock, fowl, agricultural machinery and equipment ordinarily used by the debtor in their farm operation, not exceeding $5,000 in value, and
  • sufficient seed to seed all their land under cultivation not exceeding 100 acres
• Registered Retirement Savings Plans (RRSPs) are exempt from seizure with the exception of any contributions made to RRSPs during the 12-month period prior to the date of bankruptcy.

For more details, consider booking a free consultation with a Licensed Insolvency Trustee.

Northwest Territories

In Northwest Territories, you can generally keep:

• Household goods not exceeding $5,000 in value
• Necessary and ordinary clothing of the debtor and the family of the debtor
• Food, fuel and other necessaries of life required by the debtor and the family of the debtor for the next 12 months
• Tools of the trade not exceeding $12,000 in value and tools used for hunting not exceeding $15,000 in value
• Principal residence if it has $50,000 or less in equity
• Motor vehicle not exceeding $6,000 in value
• Necessary medical and dental aids
• Registered Retirement Savings Plans (RRSPs) are exempt from seizure with the exception of any contributions made to RRSPs during the 12 month period prior to the date of bankruptcy

For more details, consider booking a free consultation with a Licensed Insolvency Trustee.

Nunavut

In Nunavut, you can generally keep:

• All necessary household goods
• Necessary and ordinary clothing of the debtor and the family of the debtor
• Food, fuel and other necessaries of life required by the debtor and the family of the debtor for the next 12 months
• Necessary tools of the trade
• Principal residence if it has $35,000 or less in equity
• A principal motor vehicle
• Necessary medical and dental aids
• Registered Retirement Savings Plans (RRSPs) are exempt from seizure with the exception of any contributions made to RRSPs during the 12 month period prior to the date of bankruptcy

For more details, consider booking a free consultation with a Licensed Insolvency Trustee.

Yukon

In Yukon, you can generally keep:

• Household goods not exceeding $200 in value
• Necessary and ordinary clothing and personal effects of the debtor and the family of the debtor not exceeding $4,000 in value
• Food, fuel and other necessaries of life required by the debtor and the family of the debtor for the next 12 months
• Necessary tools of the trade not exceeding $600, including livestock
• Principal residence if it has $3,000 or less in equity
• Necessary medical and dental aids
• Registered Retirement Savings Plans (RRSPs) are exempt from seizure with the exception of any contributions made to RRSPs during the 12 month period prior to the date of bankruptcy