Can you have Mutual Funds if you file for Bankruptcy?
Mutual Funds in a Bankruptcy
Bankruptcy is an overwhelming concept, resulting in a plethora of questions.
Many wish to understand what they can expect to lose and retain after filing.
It helps to know that there are exemptions in place to allow you to keep certain assets.
When you speak with a Licensed Insolvency Trustee, they will proceed to help you assess all suitable options relating to your individual financial circumstances.
From there, they can guide you towards a proper solution for your issues.
Generally, bankruptcy is only applicable when there are no other choices.
In many cases, Consumer Proposals offer a more preferable arrangement for debt issues.
Essentially, bankruptcy gives individuals with the utter inability to handle their debts a chance to proceed with their lives.
Provided the debtor is making all reasonable efforts and the debts are literally out of control, the option can work.
When you consider bankruptcy with your trustee, discuss with them your jurisdiction’s rules relating to exempt assets.
Learn how you, specifically, will be impacted by these regulations.
If you have tax free savings, retirement arrangements, or mutual funds, it is especially important to learn what is subject to seizure.
Items which aren’t exempt are seized when you are in a state of bankruptcy.
Anything which is exempt is safe – meaning you can keep it despite filing for bankruptcy.
About Mutual Funds & Bankruptcy
Mutual funds are either exempt or not based on the administration of your account.
If they are held by a company that deals in life insurance, meaning they are held segregated in matters related to life insurance matters, your account might receive exemptions.
This is provided you have a preferred beneficiary listed on your file.
These include spouses, children, parents, or grandparents.
Any other beneficiary recipients deem your mutual fund (held in life insurance arrangements) as non-exempts.
Bear in mind that tax free savings accounts are also not exempt.
Exemptions & Assets
The good news is that RRSPS are indeed exempt from seizures – save any amount paid into the fund in the year preceding bankruptcy.
Additional assets exempt from seizure include contributions to old age security as well as the Canada Pension Plan.
Other Registered Pension Plans are also exempt from seizure.
To learn more about the nuances and specifics relating to assets subject to seizure in bankruptcy, discuss your situation with a local Licensed Insolvency Trustee.
They can provide you with a thorough understanding of what you will and won’t be able to keep.