What You Lose in Bankruptcy

Many people ask, What will I lose in bankruptcy?  When a bankruptcy is filed in Ontario most of your personal property and belonging are considered exempt or excluded.

Property you do lose or surrender is called non-exempt property.  In a bankruptcy non-exempt property is surrendered to the insolvency trustee, who sells the property and distributes the cash to the creditors.

Property under these levels including personal property such as clothing and items of no real cash value, are exempt and not surrendered in bankruptcy.

Understand which assets are protected and how bankruptcy affects cashable items like savings and investments.

What Happens to Your Property When Filing for Bankruptcy

When filing for bankruptcy, you assign or surrender property of value to a licensed trustee.

There are two categories of property involved:

• Protected Items: Everyday essentials like clothing and personal belongings that you are allowed to keep.
• Unprotected Items: Assets exceeding government-set value limits, such as cashable savings in TFSAs, RESPs, and GICs, or other high-value property.

Filing for bankruptcy doesn’t mean losing everything—understanding what you can keep and what may need to be surrendered helps bring clarity and peace of mind. Contact us today for personalized guidance through the process.

★★★★★ Although it was the last thing we wanted to do, YanchDey made this process very smooth, they did all the paperwork and dealt with our creditors.  The garnishee was stopped and we can sleep at night, we now have a fresh start. Many thanks, Debbie S. Ajax

Homes are not automatically lost in bankruptcy.  Where you have a home, the home or real estate maybe considered an asset with monetary value.

The value of the home is based upon what if any equity available.  The equity is the value of the property, minus any mortgage. Where your real estate or home has equity or a value in excess of $10,000, this amount is taken into consideration by the bankruptcy trustee.

Where you’re considering bankruptcy your options are:

• sell the home
• consider a consumer proposal
• refinancing the property

When considering bankruptcy and there is equity in the home many people consider a consumer proposal. In a consumer proposal you usually can save 70% or more on unsecured debt allowing you to keep your home and other property.

Registered Retirement Savings Plans (RRSP) are exempt from bankruptcy in Canada, except for any contributions made within the previous twelve (12) months.

Registered Pension Plans are governed by the Ontario Pension Benefits Act and together with all registered pensions are exempt from bankruptcy.

This includes:

• Government sponsored pension plans
• Company sponsored pension plans

In these plans the assets of the bankrupt are exempt from seizure.

This includes spousal RRSP’s, and Registered Retirement Income Funds (RRIF’s).

Any assets not exempt from seizure in a bankruptcy can be purchased back from the trustee at fair market value.

Where the bankrupt has property that they do not want to lose, the trustee will assign a value to the property.  The bankrupt can then pay that amount so that they do not lose the property.

To find out if you have any non-exempt assets give us a call today.