An In-depth Analysis of the Bankruptcy Exemptions For All Provinces In Canada
Declaring bankruptcy is often viewed as a last resort for individuals struggling with insurmountable debt. However, the common myth that filing for bankruptcy leads to the loss of all personal assets is not accurate. In reality, bankruptcy laws in Canada are designed to provide individuals with a fresh start while ensuring they retain necessary assets for basic living. This process, governed by the Bankruptcy and Insolvency Act in Canada, provides certain exemptions for personal assets depending on the province or territory of residence.
In this comprehensive guide, we will explore in detail what you can keep after filing for bankruptcy in each Canadian province and territory.
Overview: Protecting Your Assets in Bankruptcy
In a bankruptcy proceeding, you assign your assets over to a Licensed Insolvency Trustee, who then uses these assets to pay off your creditors. However, not all your assets are seized in this process. Certain exemptions are in place to ensure you can continue to live a reasonable lifestyle. The specific types of assets you can keep after filing for bankruptcy generally include:
- Personal items and clothing.
- Household furniture, food and equipment in your permanent home.
- Tools necessary for your work.
- A motor vehicle, provided its value does not exceed a certain limit.
- Certain types of farm property.
Moreover, changes in the Bankruptcy and Insolvency Act now allow you to keep your RRSPs, RESPs, and other pension property except for contributions made in the last 12 months.
The exact amount of each asset you can keep in a bankruptcy varies by province and changes periodically. Therefore, it is strongly recommended to consult a Local Bankruptcy Canada Trustee to review your personal situation.
Provincial and Territorial Bankruptcy Exemptions
The bankruptcy exemptions, which dictate what you can keep after filing for bankruptcy, are set by provincial legislation. As such, these exemptions vary across Canada. Below, we examine the bankruptcy exemptions for each province and territory.
Alberta
The exempt property in Alberta is outlined in the Civil Enforcement Act. The exemptions include:
- Food for a 12-month period.
- Clothing up to $4,000.
- Household furniture and appliances up to $4,000.
- One motor vehicle up to $5,000.
- Equity in your principal residence up to $40,000, reduced to your share if you are a co-owner.
- Tools of your trade up to $10,000.
- Farm land where your principal source of income is farming, up to 160 acres.
- Farm property requirements for 12 months operations.
- Social allowance, handicap benefit or a widow’s pension if the benefits are not intermingled with other funds.
- Health aids.
If you’re considering bankruptcy in Alberta, you can learn more about bankruptcy exemptions in Alberta by consulting your local Bankruptcy Alberta Trustee.
British Columbia
The exempt property in British Columbia is governed by the Court Order Enforcement Act and Regulations. The exemptions include:
- Clothing for yourself & your dependents, no dollar limit.
- Household goods up to $4,000.
- One motor vehicle up to $5,000 (or $2,000 if you behind on child support payments).
- Tools of your trade up to $10,000.
- Principal residence (equity) up to $9,000 (or $12,000 in Greater Vancouver or Victoria).
- Medical aids.
For more information on bankruptcy exemptions in British Columbia, please consult your local Bankruptcy British Columbia Trustee.
Manitoba
Manitoba’s bankruptcy exemptions are outlined in the Executions Act and the Judgments Act. The exemptions include:
- Food and fuel for six month supply or cash equivalent.
- Personal clothing.
- Household furniture and appliances up to $4,500.
- One motor vehicle up to $3,000 where used in employment (no limit for farmers).
- Health & medical aids.
- Tools of your trade up to $7,500.
- Farm property: buildings and requirements for 12 months operations.
- Principal residence up to $2,500 (see farm land), or $1,500 if you are a co-owner.
- Farm land where you reside or cultivate, up to 160 acres.
- Items needed for religious services.
- Locked-in pension plans.
- Certain life insurance policies.
- Municipal or school property.
For more information on bankruptcy exemptions in Manitoba, please consult your local Bankruptcy Manitoba Trustee.
New Brunswick
The exemptions include:
- Food and fuel for a three month period.
- Personal clothing.
- Household furniture and appliances up to $5,000 (more in some cases).
- One motor vehicle used for employment up to $6,500 (more in some cases).
- Tools of your trade up to $6,500.
- Farm animals to specified limits, their feed for six months, and seeds to specified limits.
- Health and medical aids.
- Items needed for religious services.
- Pets.
- Pension plans.
For more information on bankruptcy exemptions in New Brunswick, please consult your local Bankruptcy New Brunswick Trustee.
Newfoundland & Labrador
In Newfoundland & Labrador, the exempt property is set by the Judgment Enforcement Act and Regulations and the Personal Property Security Act. The exemptions include:
- Food and fuel for a twelve month period.
- Clothing up to $4,000.
- Household furniture and appliances specific types, up to $4,000.
- One motor vehicle up to $2,000.
- Tools of your trade up to $10,000.
- Farm or fishing or aquaculture property up to $10,000.
- Principal residence: up to $10,000.
- Health and medical aids.
- Pets.
- Personal items of sentimental value up to $500.
- Certain pension plans.
- Certain income.
For more information on bankruptcy exemptions in Newfoundland & Labrador, please consult your local Bankruptcy Newfoundland & Labrador Trustee.
Nova Scotia
In Nova Scotia, the exempt property is set by the Judicature Act and Regulations and the Personal Property Security Act. The exemptions include:
- Food and fuel.
- Personal clothing.
- Household goods up to $6,500, more in some cases.
- One motor vehicle up to $3,000, or up to $6,500 if needed for work.
- Health and medical aids.
- Tools of the trade up to $1,000.
- Seeds and livestock for domestic use.
For more information on bankruptcy exemptions in Nova Scotia, please consult your local Bankruptcy Nova Scotia Trustee.
Ontario
In Ontario, the exempt property is defined by the Executions Act. The exemptions include:
- Household furniture, appliances up to $14,180.
- Personal clothing of unlimited value.
- One motor vehicle up to $7,117.
- Tools of your trade up to $14,405.
- In the case of a farmer, livestock, fowl, bees, books, tools and implements and other chattels ordinarily used by the debtor in the debtor’s occupation up to $31,379.
- Most pension plans, life insurance policies, and certain RRSPs.
For more information on bankruptcy exemptions in Ontario, please consult your local Bankruptcy Ontario Trustee.
Prince Edward Island
In Prince Edward Island, the exempt property is defined by the Judgment and Execution Act and the Personal Property Security Act. The exemptions include:
- Food, fuel, household furniture, appliances up to $2,000.
- Personal clothing.
- One motor vehicle (needed for occupation) up to $6,500.
- Tools of your trade up to $2,000.
- Health and medical aids.
- Seed for up to 100 acres, other up to $5,000.
- RRSPs with beneficiary a family member: no dollar limit.
For more information on bankruptcy exemptions in Prince Edward Island, please consult your local Bankruptcy PEI Trustee.
Quebec
In Quebec, the exempt property is defined by the Code of Civil Procedure. The exemptions include:
- Food and fuel.
- Personal clothing.
- Certain household furniture and appliances up to $6,000.
- Motor vehicle.
- Disability aids, accident benefits.
- Tools of your trade.
- Farm property.
- Principal residence equity value up to $10,000.
- Support received through court order, donation, or bequest.
- Most property declared exempt by a donor or will.
- A certain portion of your wages and salary, based on the number of your dependents.
- Benefits payable and employer contributions under an employer-sponsored pension plan.
- Family papers and portraits, medals and other decorations, and documents.
- Items used in religious worship.
- Income for services as a minister of religion.
- Food, lodging, and transportation passes received for employment travel.
For more information on bankruptcy exemptions in Quebec, please consult your local Bankruptcy Quebec Trustee.
Saskatchewan
In Saskatchewan, the exempt property is defined by the Exemptions Act and the Saskatchewan Farm Security Act. The exemptions include:
- Food and fuel cash equivalent of supply until the next harvest.
- Personal clothing.
- Household furniture and appliances up to $4,500 (or $10,000 for a farm).
- One motor vehicle (needed for occupation).
- Tools of your trade up to $4,500.
- Livestock and equipment for up to 12 months, two bushels seed per acre of land under cultivation, and enough cash or current crop for farming costs to the next harvest.
- Principal residence equity up to $32,000 (your share) and associated land up to 160 acres.
- All retirement savings plans: RRSPs, RRIFs, and DPSPs.
- Certain life insurance policies.
For more information on bankruptcy exemptions in Saskatchewan, please consult your local Bankruptcy Saskatchewan Trustee.
Northwest Territories
In the Northwest Territories, the exempt property is defined by the Exemptions Act. The exemptions include:
- Personal clothing.
- Necessary medical and dental aids.
- Food and fuel necessary for the debtor and their family for the next 12 months.
- Household furniture, utensils and appliances up to a value of $200.
- Tools, equipment, books or other property up to a value of $600 that the debtor requires for their profession, trade or business.
- One motor vehicle up to a value of $600 that the debtor requires for their profession, trade or business.
- One motor vehicle up to a value of $600 that the debtor or their dependents require for personal transportation
- The debtor’s principal residence up to a value of $3,000.
- Registered Retirement Savings Plans (RRSPs) are exempt from seizure with the exception of any contributions made to RRSPs during the 12 month period prior to the date of bankruptcy
For more information on bankruptcy exemptions in the Northwest Territories, please consult your local Bankruptcy Northwest Territories Trustee.
Nunavut
In Nunavut, the exempt property is defined by the [Exemptions Act]. The exemptions include:
- Necessary and ordinary clothing of the debtor and the family of the debtor.
- Food, fuel and other necessaries of life required by the debtor and the family of the debtor for the next 12 months.
- Household furniture, utensils, equipment, food and fuel that are contained in and form part of the permanent home of the debtor, up to a total value of $200.
- Tools, equipment, books or other property up to a total value of $600 that the debtor requires for the debtor’s profession, trade or business.
- One motor vehicle up to a total value of $600 that the debtor requires for the debtor’s profession, trade or business.
- One motor vehicle up to a total value of $600 that the debtor or the debtor’s dependents require for personal transportation.
- The principal residence of the debtor up to a total value of $3,000.
- Registered Retirement Savings Plans (RRSPs) are exempt from seizure with the exception of any contributions made to RRSPs during the 12 month period prior to the date of bankruptcy.
For more information on bankruptcy exemptions in Nunavut, please consult your local Bankruptcy Nunavut Trustee.
Yukon
In Yukon, the exempt property is defined by the Exemptions Act. The exemptions include:
- Necessary and ordinary clothing of the debtor and the family of the debtor.
- Food, fuel and other necessaries of life required by the debtor and the family of the debtor for the next 12 months.
- Household furniture, utensils, equipment, food and fuel that are contained in and form part of the permanent home of the debtor, up to a total value of $200.
- Tools, equipment, books or other property up to a total value of $600 that the debtor requires for the debtor’s profession, trade or business.
- One motor vehicle up to a total value of $600 that the debtor requires for the debtor’s profession, trade or business.
- One motor vehicle up to a total value of $600 that the debtor or the debtor’s dependents require for personal transportation.
- The principal residence of the debtor up to a total value of $3,000.
- Registered Retirement Savings Plans (RRSPs) are exempt from seizure with the exception of any contributions made to RRSPs during the 12 month period prior to the date of bankruptcy.
For more information on bankruptcy exemptions in Yukon, please consult your local Bankruptcy Yukon Trustee.
Conclusion
Filing for bankruptcy is a significant decision that can provide relief from overwhelming debt. However, it’s essential to understand that this process does not strip you of all your belongings. The specific assets you can retain after filing for bankruptcy depend significantly on the province or territory you live in. Therefore, before making any decisions, it is crucial to consult with a Licensed Insolvency Trustee who can guide you through the process and ensure you are fully informed of your rights and obligations.
To learn more about what you can keep after filing for bankruptcy, you may schedule a free consultation with a Licensed Insolvency Trustee. They will provide you with personalized advice based on your financial situation and the specific bankruptcy exemptions in your province or territory.
