What Happens to My Assets When Filing Bankruptcy?

What Happens to My Assets When Filing Bankruptcy?

When considering bankruptcy, one of the common concerns individuals have is regarding their assets. A commonly held belief is that bankruptcy inevitably leads to the loss of all possessions. However, this is not the case, especially in Canada. In fact, many Canadians who declare bankruptcy each year retain significant assets like their homes and vehicles.

In this article, we will explore the fate of your assets when filing bankruptcy, the exemptions depending on your province of residence, and the alternatives you can consider to preserve your assets.

The Fate of Your Assets in Bankruptcy

The primary objective of declaring bankruptcy is to get a fresh financial start by eliminating unmanageable debt. The process involves transferring non-exempt assets to a Licensed Insolvency Trustee, who uses these to repay the creditors. But what assets can you keep when filing bankruptcy? The answer to this depends on the province of your residence, as each has its own laws regarding exempt assets.

Bankruptcy Exemptions: Province-wise

The assets you can retain in bankruptcy depend on the province you reside in. Some provinces allow you to keep higher valued assets than others. In Ontario, for example, all assets are exempt from surrender except those of high value. Here is a quick overview of bankruptcy exemptions in some key provinces:

Assets You Can Keep in Bankruptcy

Here is a list of assets that you typically get to retain when filing bankruptcy in Canada, subject to provincial limits:

  1. Your home, if its equity is less than $10,000
  2. A motor vehicle valued up to a provincial limit
  3. Personal belongings and clothes
  4. Work-related equipment
  5. Household furniture, food, and tools
  6. Certain types of agricultural property
  7. RRSP, RRIF, RESP, and DPSP savings, except contributions made in the year prior to filing bankruptcy

If you have high-value assets, you might want to discuss alternatives to bankruptcy, like a consumer proposal or debt consolidation.

Keeping Your House in Bankruptcy

Contrary to popular belief, filing bankruptcy does not automatically result in the loss of your home. You can keep your home if you can keep up with the mortgage payments, and the home equity is less than $10,000. If your home equity exceeds this limit, a consumer proposal might be a better option.

Keeping Your Car in Bankruptcy

When filing bankruptcy, you can generally keep one vehicle as long as its value is below the provincial limit. In 2021, in Ontario, you can keep a vehicle you own under the value of $7,117. If the vehicle is worth more, you can still keep it by paying the difference. If you have a car loan or lease and can continue making the payments, you can keep the vehicle.

Getting a Car After Bankruptcy

Many people fear that bankruptcy will make it impossible to get a car loan, but this is not the case. It is relatively straightforward to get a car loan after bankruptcy by rebuilding your credit, presenting a healthy down payment, and maintaining a steady income.

Life After Bankruptcy

Filing bankruptcy can have a complex impact on your assets. But with the right guidance and strategy, you can rebuild your financial life post-bankruptcy. This might involve steps like rebuilding your credit score, which can enable you to secure a mortgage or car loan.


The journey through bankruptcy can be challenging, but understanding the process and its impacts can make it less daunting. It is crucial to remember that while bankruptcy does involve surrendering some assets, many of your assets will remain yours. The key is to approach the process with an informed mind, preferably with the help of experienced professionals. This approach can help you make decisions best suited to your financial situation, ultimately leading you towards financial freedom.

Remember, bankruptcy is not the end; it’s a new beginning. It provides the opportunity to start fresh, free from the burden of insurmountable debt, and to rebuild a strong financial future.

Find Your Personal Debt Relief Solution

Licensed Insolvency Trustees are here to help. Get a free assessment of your options.

Discuss options to get out of debt with a trained & licensed debt relief professional.