How Does Property Outside Of Canada Factor Into A Canadian Bankruptcy?

Dealing with International Property in a Canadian Bankruptcy: A Comprehensive Guide

When financial turmoil strikes and bankruptcy appears to be the only way out, property ownership, especially outside of one’s home country, raises several questions. One such question that Canadian citizens often grapple with is: How Does Property Outside Of Canada Factor Into A Canadian Bankruptcy?

In this article, we delve into this complex issue, laying out all the facets and implications involved.

Understanding Canadian Bankruptcy: The Basics

To comprehend the impact of foreign property on Canadian bankruptcy, it’s crucial to first grasp the essentials of Canadian bankruptcy law.

Canadian bankruptcy law operates on a simple premise – when you file for bankruptcy, you essentially hand over your assets to a Licensed Insolvency Trustee (LIT), who then liquidates them to compensate your creditors.

But does this apply to your assets beyond Canadian borders? Let’s find out.

The Reach of Canadian Bankruptcy Law

Bankruptcy law in Canada is quite comprehensive. However, it does not have the power to protect property located in other countries. That said, owning property outside Canada doesn’t automatically disqualify you from filing for bankruptcy, nor does it mean you’ll lose that property.

Your LIT will guide you through the process and help you explore possible outcomes before you decide to proceed with bankruptcy.

Assessing the Worth of Your International Property

When you own property outside Canada, your LIT’s first task is to determine its value and figure out if there would be any proceeds from its sale that could go towards settling your debts.

To do this, your LIT might ask you questions about the purchase date, price, any outstanding mortgages or liens, co-owners, and past appraisals. You may also be asked to provide supporting documentation and get a fresh appraisal from a certified appraiser familiar with the property’s locality.

In cases where your property has no value for the creditors, you can make a nominal offer to the LIT to buy their interest in your property. This is usually a reasonable offer, and once paid, the LIT releases their interest back to you.

When Your Property Has Value

If your property has value, your LIT has a duty to realize it for the creditors. Depending on the circumstances, this could mean selling the property, asking you to make payments equal to the available equity, or determining if the costs of liquidating the property outweigh the potential benefit for the creditors.

The location of the property can significantly influence the decision. If your property is located on a different continent, the costs and complexities of selling could outweigh the potential gains. Similarly, if you co-own the property, dealing with the other owners to settle your share can be too costly.

Disclosing Your Property

When filing for bankruptcy, you are legally obligated to disclose all your income and assets to the LIT. Failing to do so can delay and complicate the bankruptcy process and could even land you in bankruptcy court, affecting your ability to be discharged from your debts.

Evaluating All Options

Before making any decisions, it’s crucial to explore all your options. A trusted debt advisor or LIT can help you find the best solution for dealing with your debts, taking into account your foreign property.

A free consultation with a Licensed Insolvency Trustee or a trusted debt advisor is a great first step to understanding How Does Property Outside Of Canada Factor Into A Canadian Bankruptcy.

The Role of a Licensed Insolvency Trustee (LIT)

In Canada, Licensed Insolvency Trustees (LITs) are federally regulated professionals who provide advice and services to individuals and businesses with debt problems. LITs help people make informed choices to deal with their financial difficulties.

Your Next Steps

  1. Be Prepared: Gather all your financial statements and information about your foreign property to discuss with your debt professional.
  2. Consider Your Options: Working together with your debt professional, you’ll discuss your unique situation and explore all the available options.
  3. Achieve a Debt-Free Life: Your LIT will work with you to file all appropriate paperwork and make sure you understand your obligations as you move towards a strong financial future and a debt-free life.


Understanding How Does Property Outside Of Canada Factor Into A Canadian Bankruptcy can be complex and daunting. However, with the guidance of an experienced Licensed Insolvency Trustee, you can navigate the process smoothly and make informed decisions about your financial future. Remember, each case is unique, and the information provided here is general. Always consult with a professional for advice tailored to your specific circumstances.

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