How Does Property Outside Of Canada Factor Into A Bankruptcy?

Examining the Impact of Foreign Property on Canadian Bankruptcy

When contemplating personal bankruptcy in Canada, individuals often wonder, “How does property outside of Canada factor into a bankruptcy?” This question is especially pertinent for those who own property abroad. In Canada, bankruptcy law does not protect foreign-based assets, yet it doesn’t disqualify one from bankruptcy proceedings either.

The Role of a Trustee in Bankruptcy Proceedings

When you declare bankruptcy, you essentially entrust your assets to a Trustee. The Trustee then liquidates these assets, providing your creditors with some compensation for the debt you owe1. The Trustee also helps you evaluate your financial situation and guides you on the best course of action.

Foreign Property and its Value

One of the first tasks for a Trustee is to determine the value of your foreign property and whether its sale could potentially benefit your creditors. This appraisal process requires several aspects to be considered:


  • The purchase date and cost of the property;
  • Any existing mortgages or liens on the property;
  • The presence of co-owners;
  • Past appraisal records, if any;
  • Property appraisal.

Documentation Requirement

To support the appraisal process, the Trustee would require documents such as mortgage statements, purchase papers, and appraisal reports. A certified appraiser familiar with the area may also need to evaluate the property.

What Happens If The Property Has No Value For Creditors?

In instances where the property holds no value to the creditors, you can offer to buy the Trustee’s interest in your property. Typically, such offers are reasonable, and once fulfilled, the Trustee relinquishes their interest in the property.

Dealing with Valuable Property

When the property holds significant value, the Trustee’s obligation is to attempt to realize upon the asset for the creditors. However, the best way forward isn’t always straightforward.

There are three likely scenarios:


  1. Putting the property up for sale
  2. Requesting the bankrupt individual to pay into their bankruptcy estate an amount equal to the available equity to retain the property
  3. Assessing whether the costs of liquidating the property outweigh the potential benefit for the creditors

The property’s location and type, as well as the presence of co-owners, can influence these outcomes. For instance, selling a property located on a different continent could be challenging and expensive.

A timeshare property, which is hard to sell at a fair price due to the market saturation, might not hold much value for the bankruptcy estate. In such cases, the Trustee might prefer a reasonable settlement with the bankrupt person.

Disclosing Foreign Property

It is crucial to disclose all your income and assets, including foreign property, to the Trustee when filing for bankruptcy. Failure to do so can complicate and delay the bankruptcy process, possibly leading to a court scenario.

Seeking Professional Advice

A qualified debt advisor can help you navigate your debt issues while considering your foreign property. Although bankruptcy law might not allow you to exclude the property from your bankruptcy proceedings, the outcome may not be as dire as you fear.

A Licensed Insolvency Trustee can guide you on other options for tackling your debt, which might be more suitable given the foreign property you own.

Securing a free consultation with a Licensed Insolvency Trustee or a trusted debt advisor is a wise first step in understanding how property outside of Canada factors into a bankruptcy.



The process of bankruptcy is complex, and the presence of foreign property can make it even more challenging. The role of a Trustee is indispensable in such scenarios, guiding you through the process and helping you make informed decisions.

Understanding “How does property outside of Canada factor into a bankruptcy” can be crucial for those grappling with debt and owning property abroad. It’s important to explore all available options and seek professional advice before making any decisions. With the right guidance and strategic planning, bankruptcy can serve as a fresh financial start.

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