Will I Lose My RRSPs When I Declare Bankruptcy?

Safeguarding Your RRSPs Amidst Bankruptcy: An In-depth Guide

Amidst the looming concern of bankruptcy, a common question that arises is, “Will I lose my RRSPs when I declare bankruptcy?” The fear of losing hard-earned retirement savings can be overwhelming. However, the answer to this question brings a sigh of relief: No, your RRSPs are typically safe in bankruptcy.

Understanding Bankruptcy

Bankruptcy is a legal process providing immediate relief to individuals who are unable to pay their debts. It grants protection from creditors under the Bankruptcy and Insolvency Act (BIA), enabling individuals to start afresh financially.

The Impact of Bankruptcy on RRSPs

A common misconception is that declaring bankruptcy will lead to the loss of all personal assets, including RRSPs. However, contrary to this belief, most RRSPs are protected under the BIA.


“The BIA is designed to provide financial relief and protection to individuals facing bankruptcy.”


RRSPs Before, During, and After Bankruptcy

Before Bankruptcy: Prior to bankruptcy, some types of RRSPs can be claimed by creditors.

During Bankruptcy: The moment bankruptcy is filed, RRSPs and pension funds (excluding contributions made in the past year) are safeguarded from seizure under the BIA.

After Bankruptcy: Post-bankruptcy, all debts are settled, and no one can pursue you for past debts. Your retirement savings remain intact and available for use in your golden years.

Other Protected Retirement Assets

Declaring bankruptcy does not only protect your RRSPs. Most of your retirement investments are safe. Here’s a list of financial products that remain untouched in bankruptcy:


  • RRSPs.
  • Employer-sponsored retirement savings plans and pensions.
  • Registered Retirement Income Funds (RRIFs).
  • Locked-In Retirement Accounts (LIRAs).
  • Fonds de solidarite FTQ or Fondaction (CSN) investments.


Exceptions to the Rule

While most retirement savings are safe, some exceptions apply. For instance, if you are behind on spousal support, your ex-spouse could claim your assets.

Non-Protected Assets

Unfortunately, not all savings are protected in bankruptcy. Tax-Free Savings Accounts (TFSAs) and Registered Education Savings Plans (RESPs) are susceptible to claims.

Consumer Proposal: A Viable Alternative

Bankruptcy might seem like the best option to wipe the slate clean, but alternatives like a consumer proposal should be considered. A consumer proposal protects all personal savings from seizure, including TFSAs and RESPs, making it an attractive alternative to bankruptcy.


“A consumer proposal offers protection to all personal savings, including TFSAs and RESPs.”


Comparing Bankruptcy and Consumer Proposal

Both bankruptcy and a consumer proposal provide financial relief. However, the consumer proposal extends protection to all savings, including TFSAs and RESPs, an advantage not offered by bankruptcy.

Seeking Expert Advice

Choosing between bankruptcy and a consumer proposal can be challenging. Consulting an expert can help you understand the benefits of both options and decide the best course of action.

In conclusion, the fear of losing your RRSPs when declaring bankruptcy can be put to rest. While some exceptions apply, most retirement savings are protected in bankruptcy, allowing you to enjoy the fruits of your labor in retirement.

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