Canadian Bankruptcy Exemptions – Assets you keep in a Canadian Bankruptcy

One of the major tenets of Canadian bankruptcy law is that a person, overwhelmed by debt, deserves the opportunity of a fresh financial start.

Part of that fresh start includes leaving the person with enough possessions to maintain dignity and to help that person towards his or her fresh start.

The property exempt form seizure, in a bankruptcy, is set by the provinces and territories.

Bankruptcy exemptions refer to the equity in the property that is exempt from seizure in a bankruptcy or any other seizure situation.

For example, if you have a car worth $10,000 and there is a $6,000 secured debt against it then the equity in the car is $4,000. If the exemption for a car is $5,000, you would be eligible to keep the $4,000 car because the equity of $4,000 is below the exemption level for equity of $5,000.

Declaring bankruptcy is meant to give you a fresh start, which is why the exemptions are part of bankruptcy laws across the country.

Everything from household furnishings and appliances, a motor vehicle, pension plans and lands up to as much as 160 acres can be kept.

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Nunavut Bankruptcy Exemptions

Nunavut Bankruptcy Exemptions are:

Household goods – unlimited; Clothing – unlimited; Food – 12 months; Tools of Trade – unlimited; Hunting Tools – unlimited; Residence – $35,000; Vehicle – unlimited; Medical Aids – unlimited.

Exemptions are in effect for all registered retirement savings plans (RRSP’s, RRIF’s and DPSP’s (Deferred Profit Sharing Plans).

• Contributions made in the 12 months prior to the date of bankruptcy will be recovered (clawed back) for the benefit of the bankruptcy estate for RRSPs in provinces without RRSP exemption laws (BC, Alberta, Ontario, NB, and NS);
• There will be no upper cap on the amount of RRSPs that can be protected;
• There will be no need to set up the RRSPs in a locked in plan to make them eligible for exemption;
• The court will have no jurisdiction to extend the one year claw back period period in an appropriate case.

NWT Bankruptcy Exemptions

NWT Bankruptcy Exemptions are:

Household goods – $5,000; Clothing – unlimited; Food – 12 months; Tools of Trade – $12,000; Hunting Tools – $15,000; Residence – $50,000; Vehicle – $6,000; Medical Aids – unlimited.

Exemptions are in effect for all registered retirement savings plans (RRSP’s, RRIF’s and DPSP’s (Deferred Profit Sharing Plans).

• Contributions made in the 12 months prior to the date of bankruptcy will be recovered (clawed back) for the benefit of the bankruptcy estate for RRSPs in provinces without RRSP exemption laws (BC, Alberta, Ontario, NB, and NS);
• There will be no upper cap on the amount of RRSPs that can be protected;
• There will be no need to set up the RRSPs in a locked in plan to make them eligible for exemption;
• The court will have no jurisdiction to extend the one year claw back period period in an appropriate case.

Yukon Bankruptcy Exemptions

Yukon Bankruptcy Exemptions are:

Exemptions Act

Personal Property:

Paragraph 2(1)(a) and subsection 2(2) provide an exemption for household furniture, utensils and equipment that are contained in and form part of the debtor’s permanent home.

Paragraph 2(1)(b); necessary and ordinary clothing of the debtor and the family of the debtor;

Paragraph 2(1)(c); food, fuel and other necessaries of life required by the debtor and the family of the debtor for the next 12 months;

Paragraph 2(1)(d) provides an exemption for tools, implements and other chattels necessary to, and actually used by the debtor in his business, profession or calling (not exceeding $600.00).

House, buildings and lot:

Paragraph 2(1)(e) provides an exemption for the house and buildings occupied by the debtor and the lot on which they are situated (not exceeding $3,000.00).

RRSP’s associated with life insurance policies are exempt from seizure or attachment.

The Exemptions apply to all registered retirement savings plans (RRSP’s, RRIF’s and DPSP’s (Deferred Profit Sharing Plans).

• Contributions made in the 12 months prior to the date of bankruptcy will be recovered (clawed back) for the benefit of the bankruptcy estate for RRSPs in provinces without RRSP exemption laws (BC, Alberta, Ontario, NB, and NS);
• RRSPs will have no upper cap limit that can be protected by the exemptions;
• RRSPs will be protected by the exemptions in your province even if they are not in a locked in plan;
• The one year period in which RRSP contributions can be recovered for the bankruptcy estate cannot be extended by the courts in an appropriate case.