Understanding Bankruptcy Exemptions: Your Property and Assets
Bankruptcy shouldn’t be the initial option for somebody who’s in a serious financial crisis. Compared to the debt relief solution such as consumer proposal, filing for personal bankruptcy in Canada will remain on your credit history for 6 to 14 years. Plus, you’ll be obliged to assign your assets and property to a Licensed Insolvency Trustee to dismiss all your debts. However, some exceptions differ by certain provinces which may let you keep at least some claims.
Although compared to the debt relief options such as consumer proposal, filing for bankruptcy in Canada can put you at risk of losing your assets. However, you don’t have to worry if your assets are protected under exemptions. On the contrary, your assets that are not protected may be seized by a bankruptcy trustee. Hence, this is a turning point for someone not to file; weighing your options and exhausting all other debt relief measures are available for you to get out of debt.
How Bankruptcy Exemptions Works in Canada?
Though most people stumble in bankruptcy as their primary go-to regimen resulting in losing their properties, the bankruptcy laws in Canada exist to give individuals a second chance to restore life and not as a punishment. Therefore, bankruptcy can be perceived as a financial scab that will heal with proper care; it’s a devastating situation to dwell but is designed to give you a fresh start.
Some myths regarding bankruptcy involve a bad impression that it eliminates your entire debts and assets. Bankruptcy laws in Canada allow a bankrupt individual to retain some of the assets in a justifiable reason to sustain living after the discharged of bankruptcy. Moreover, there are certain sets of guidelines with the exemptions by province and territory such as in Yukon Bankruptcy or NWT Bankruptcy and items listed below. So, you can still retain your assets even after filing for bankruptcy. The substantial value of exemptions differs by the provinces and territories in Canada.
What Are Common Canada Bankruptcy Exemptions?
Bankruptcy exemptions, are intended to enable you to save some of your assets, which the government believes to be fair subsistence. The exemptions of Bankruptcy in Canada are anchored by its provincial legislation. Commonly the varieties of assets that are excluded from potential apprehension by the trustee are the same across Canada.
Furthermore, your Registered Retirement Savings Plans are exempt from bankruptcy under the federal law of 2008. Consequently, during debt settlement and debt relief options, you can feel at ease that your retirement savings are exempt from being seized.
However, any contribution made for the past 12 months is not exempt prior to filing bankruptcy. Moreover, the types of assets that are exempt from seizing includes your personal possessions. These includes clothing, work or household equipment, livelihood assets, and a motor vehicle worth up to a set limit. For instance, one motor vehicle might be exempt up to $15,000 by a province, and the other may set the limit value at $10,000.
Bankruptcy Exemptions by Province
You may click on the name of province or territory to further check on the bankruptcy details for each.
Alberta
Exempt Property
Adequate food for one year
Clothing valued up to $4,000
Household commodities valued up to $4,000
A motor vehicle valued up to $5,000
Home equity valued up to $40,000 (reduced share if co-owned)
Work tools valued up to $10,000
Farm property for livelihood (up to 160 acres)
British Columbia
Exempt Property
No dollar limit for you and your dependents’ clothing
Household commodities valued up to $4,000
A motor vehicle valued up to $5,000 and $2,000 if dilatory on child support
Work tools valued up to $10,000.
Home equity valued up to $9,000 and $12,000 in Greater Vancouver or Victoria
Entire Medical aids
Manitoba
Exempt Property
Cash equity for the six-month duration of food supply and fuel
Own Clothing
Household belongings valued up to $4,500
A motor vehicle up to $3,000, but carries no limit if used to sustain a livelihood for farmers
All medical support
Work tools valued up to $7,500
Farm property
Home equity up to $2,500 and $1,500 if co-owned
160 acres of Farmland where you live or cultivate.
Religious services belongings
Locked-in pension arrangements
Some life insurance policies
City or school assets
New Brunswick
Exempt Property
Food and Fuel for
Own clothing
Household belongings up to $5,000 or more depending on the case
One motor vehicle for work up to $6,500 or more depending on the case
Work tools up to $6,500
Farm animals to itemized limits within six months, and grains to detailed limits.
All Health and medical support
Religious services items
Pets
Pension plans
Newfoundland & Labrador
Exempt Property
12 month period of food and fuel
Clothing up to $4,000
Household goods up to $4,000
A motor vehicle valued up to $2,000
Business Tools up to $10,000
Farm or fishing assets up to $10,000
Home equity up to $10,000
All health and medical support
Pets
Personal value items up to $500
Some pension plans
Some income
Nova Scotia
Exempt Property
Food and fuel
Own clothing
Household assets up to $6,500
A motor vehicle worth up to $3,000 to $6,500 if required for employment
All health and medical support
Business or work tools up to $1,000
Grains and livestock for private use
Ontario
Exempt Property (amounts will be indexed per annually)
Household goods up to $13,150
Personal clothing of unlimited value
One motor vehicle up to $6,600
Work or Business tools up to $11,300
For farmers: livestock and other goods
Most of the pension plans
Most life insurance policies
Some RRSPs
Prince Edward Island
Exempt Property
Food, fuel, household goods up to $2,000
Own clothing
Motor vehicle for occupation up to $6,500
Work Tools worth $2,000
All health and medical aids
Seeds for up to 100 acres to $5,000
RRSPs with recipient no dollar limit
Quebec
Exempt Property
Food and fuel
Personal clothing
Household goods up to $6,000
Motor vehicle
Disability or accident benefits
Tools of your trade
Farm property
Residence equity up to $10,000
Court order, donation, or bequest support
Most properties declared by a donor or bestowal
A portion of your wages and salary
Benefits owed and employer grants
Saskatchewan
Exempt Property
Food and fuel until the next harvest
Own clothing
Household goods up to $4,500 (or $10,000 for a farm)
Motor vehicle for occupation
Work tools up to $4,500
Livestock and equipment up to 12 month
Residence equity up to $32,000 or land up to 160 acres
All retirement savings plans
Some life insurance policies
CONSUMER PROPOSAL EXAMPLE
Example Unsecured Debts
1 | Personal loan | $8,000 |
2 | Credit card 1 | $6,812 |
3 | Tax Debts | $5,399 |
4 | Overpayments | $5,200 |
5 | Overdraft | $700 |
Total Owed | $30,204 |
Your Monthly Repayments Would Be
a Consumer proposal $748
(total contractual repayments)
a Consumer proposal $295
(total contractual repayments)
60%
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances.