Cashing in RRSPs to Pay Debt and Avoid Bankruptcy?
Should I Cash in My RRSPs if I’m in Debt?
If you are in debt and struggling to make payments, then you are probably looking at courses of action which you can take.
These may include liquidating your RRSP funds to assist in avoiding bankruptcy.
However, this is not always the best route.
Bear in mind that RRSP funds are seizure exempt in the province of Ontario.
Only the amounts added to the RRSP in the preceding year prior to bankruptcy can be seized.
Across Canada, RRSPS are protected from proceedings related to bankruptcy to assist Canadians in their retirement arrangements.
Additional protected assets include RRIF accounts with the same rules applying.
Only payments made in the preceding twelve months prior to bankruptcy can be seized.
Keep Your RRSPs Safe
It is common for people to liquidate their retirement savings in an attempt to stave off debt.
However, when they do file for bankruptcy, the RRSP is lost which means they no longer have retirement savings for their future and leave them to start from scratch.
Since the government keeps retirement savings secure from bankruptcy, it is important to consider all your options.
Prior to making your decision, discuss your options with a Licensed Insolvency Trustee.
Offering free, confidential consultations, these financial professionals can go through all your options with you and discuss the best course of action.
While it may include bankruptcy, it does not necessarily have to include the loss of your retirement security.
Since many rely on organized RRSP or RRIF contributions for their retirement, it is essential that they consider the full ramifications of liquidation before taking that step.
There are resources available; so, to make a fully informed decision, reach out to a Licensed Insolvency Trustee today.