When individuals come in to discuss their options for dealing with debt, one of the first questions they ask is whether they can keep their house, car or RRSPs.   It is a common misconception that when you file for bankruptcy, you lose everything.  This is simply not the case.

There are laws at both the federal and provincial level that outline which assets are exempt from seizure by the Trustee.  Because some of the laws are at the provincial level, there are differences across the country.   What is important to note though is that it is safe to assume that filing for bankruptcy does not mean losing everything.   There are exemptions in various amounts across the country for household goods, personal effects, pension plans, RRSPs and other assets.

While there are exemptions across most provinces relating to cars, house equity, personal effects, household goods or tools needed to earn income, there are differences in terms of the dollar value that is protected.  Here are some examples to give you an idea about the common exemptions:

  • In Alberta, the equity in your principle residence is exempt up to $40,000.00; In Manitoba equity in the amount of $2,500.00 is exempt.
  • In Ontario, you are allowed to own one motor vehicle so long as the value does not exceed $5,650.00; in Alberta the exempt value is $5,000.00.
  • In British Columbia, you can keep any tools needed for work valued at $10,000.00 or less; in New Brunswick the value is $6,500.00.

If you have assets that are valued higher than the allowable amount in your province, this does not mean that your asset will automatically be taken by your Trustee.  Most Trustees will make arrangements with you that allow you to keep the asset, so long as the value of the asset, over and above the exemption limit, is paid into your bankruptcy estate.  This means there may be an option for you to make reasonable monthly payments until the non-exempt value of your asset is paid in full.

To find out more about the laws in your province, contact a local Trustee to book a free confidential consultation.