canada bankruptcy exemptions

Bankruptcy asset exemptions in Canada

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Depending on the financial situation, declaring bankruptcy could be the best option to eliminate debt and allow you to start over with a clean slate. If it is determined that bankruptcy is the right solution, don’t worry — we'll give you all the facts you need to understand the process and get started on rebuilding your worth today.

To help put you back on the path to rebuilding your worth, each Canadian province has a number of bankruptcy exemptions, allowing you to keep some assets and a prescribed value of others. 

 

What Do I Keep In A Bankruptcy? Provincial Bankruptcy Exemptions

Under the federal Bankruptcy & Insolvency Act (BIA) each province sets their own rules and regulations as to how the assets of a bankrupt are handled.   Your Bromwich+Smith Debt Relief Specialist and Licensed Insolvency Trustee will go over your assets with you and explain what would be affected by a bankruptcy.

Note:  Although the following amounts were accurate at time of publication, it is always best to talk to a Debt Relief Specialist at Bromwich+Smith to determine how asset exemptions would affect your specific financial situation.  Further, certain contributions to savings plans, the selling or purchase of assets including luxury items, and gifts within a prescribed time period preceding your bankruptcy may not be covered by asset exemptions. Further, exemptions with no dollar value are usually limited to what you and your family reasonably need. 

Personal exemptions by province/territory

 

 

British Columbia (BC) - Asset Exemptions In Bankruptcy

Registered Savings Plans - Example: RRSP's RRIF's Exempt
Pensions Exempt - Contributions made in last 12 months are not exempt
Home $12,000 in equity in Greater Vancouver & Victoria - $9,000 in equity in all other regions
Clothing Exempt - Unlimited for essential clothing
Medical / Dental Aids Exempt - Unlimited
Household Items $4,000 (Based on reasonable amount that could be obtained by sale of items).
Vehicle $5,000 (Decreased to $2,000 if behind in Child Care payments
Work Tools $10,000
 

 

Alberta (AB) - Asset Exemptions In Bankruptcy

Registered Savings Plans - Example: RRSP's RRIF's Exempt - Unusual contributions may not be exempt
Pensions Exempt
Home Up to $40,000 in equity
Clothing $4,000 for necessary clothing
Medical / Dental Aids Exempt - Unlimited
Household Items $4,000 (Based on reasonable amount that could be obtained by sale of items).
Vehicle $5,000
Work Tools $10,000
Farmers Up to 160 acres and personal property required for the efficient operation of farm for next 12 months.
 

 

Saskatchewan (SK) - Asset Exemptions In Bankruptcy

Registered Savings Plans - Example: RRSP's RRIF's Exempt - Unusual contributions may not be exempt
Pensions Certain Types - Exempt - Contact us for details.
Home Up to $50,000 in equity
Clothing $7,500 
Medical / Dental Aids Exempt - Unlimited
Household Items Exempt
Vehicle $10,000
Work Tools Exempt
Farmers Enough cash or crops to provide until next harvest. Equipment and livestock for 12 months of operations. Tools of trade up to $20,000. 
 

 

Manitoba (MB) - Asset Exemptions In Bankruptcy

Registered Savings Plans - Example: RRSP's RRIF's Exempt - Unusual contributions may not be exempt
Pensions Certain Types - Exempt - Contact us for details.
Home Up to $2,500 in equity
Clothing Exempt
Medical / Dental Aids Exempt 
Household Items $4,500
Vehicle $3,000
Work Tools $7,500
Farmers Animals and equipment for 12 months operations. Home Quarter. Seed. 
 

 

Ontario (ON) - Asset Exemptions In Bankruptcy

Registered Savings Plans - Example: RRSP's RRIF's Exempt
Pensions Exempt
Home Up to $10,000 in equity
Clothing Exempt
Medical / Dental Aids Exempt 
Household Items $13,150
Vehicle $6,600
Work Tools $11,300
Farmers Up to $29,100 for livestock or fowl and tools and equipment.
 

 

Quebec (QC) - Asset Exemptions In Bankruptcy

Registered Savings Plans - Example: RRSP's, RRIF's Exempt 
Pensions Certain Types - Exempt - Contact us for details.
Home $10,000
Clothing Exempt
Medical / Dental Aids Exempt 
Household Items $6,000
Vehicle Exempt
Work Tools Exempt
Farmers Exempt
 

 

New Brunswick (NB) - Asset Exemptions In Bankruptcy

Register Savings Plans - Example: RRSP's RRIF's Exempt 
Pensions Certain Types - Exempt - Contact us for details.
Home Not Exempt
Clothing Exempt
Medical / Dental Aids Exempt 
Household Items $5,000
Vehicle $6,500
Work Tools $6,500
Farmers Animals, equipment seed. 
 

 

Price Edward Island (PE) - Asset Exemptions In Bankruptcy

Register Savings Plans - Example: RRSP's RRIF's Exempt 
Pensions Certain Types - Exempt - Contact us for details.
Home Not Exempt
Clothing Exempt
Medical / Dental Aids Exempt 
Household Items $5,000
Vehicle $6,500 if used for work transportation. $3,000 if not used for work.
Work Tools $2,000
Farming / Fishing Personal property used to earn income up to $5,000
 

 

Nova Scotia (NS) - Asset Exemptions In Bankruptcy

Register Savings Plans - Example: RRSP's RRIF's Exempt 
Pensions Certain Types - Exempt - Contact us for details.
Home Not Exempt
Clothing Exempt
Medical / Dental Aids Exempt 
Household Items $5,000
Vehicle $6,500 if used for work transportation. $3,000 if not used for work.
Work Tools $1,000
Farmers Animals, equipment seed. 
 

 

Newfoundland & Labrador (NL) - Asset Exemptions In Bankruptcy

Register Savings Plans - Example: RRSP's RRIF's Exempt 
Pensions Certain Types - Exempt - Contact us for details.
Home $10,000
Clothing $4,000
Medical / Dental Aids Exempt 
Household Items $4,000
Vehicle $2,000
Work Tools $6,500
Farming / Fishing Personal property used to earn income up to $10,000
 

 

Nunavut (NU) - Asset Exemptions In Bankruptcy

Register Savings Plans - Example: RRSP's RRIF's Exempt 
Pensions Certain Types - Exempt - Contact us for details.
Home $35,000
Clothing Exempt
Medical / Dental Aids Exempt 
Household Items Exempt
Vehicle Exempt
Work Tools Exempt
Farming / Fishing Exempt
 

 

Northwest Territories (NWT) - Asset Exemptions In Bankruptcy

Register Savings Plans - Example: RRSP's RRIF's Exempt 
Pensions Certain Types - Exempt - Contact us for details.
Home $50,000
Clothing Exempt
Medical / Dental Aids Exempt 
Household Items $5,000
Vehicle $6,000
Work Tools $12,000
Hunting Tools $15,000
 

 

Yukon (YU) - Asset Exemptions In Bankruptcy

Register Savings Plans - Example: RRSP's RRIF's Exempt 
Pensions Certain Types - Exempt - Contact us for details.
Home $3,000
Clothing Exempt
Medical / Dental Aids Exempt 
Household Items Exempt
Vehicle Not Exempt
Work Tools $600
 

 

What Happens to My Earnings During Bankruptcy?  Surplus Income Defined.

No matter where you reside in Canada, the distribution of your earnings during bankruptcy is governed by the Federal Government Office of the Superintendent of Bankruptcy, and is determined by what is called Surplus Income.  Simply put, your income is compared to an amount called the Surplus Income Threshold, which sets the amount of take home income a person or a family needs for a reasonable standard of living, based on their family size and family situation. You get to keep everything up to this threshold amount.  For any income above the threshold, you are required to submit 50% of this excess income for the duration of your bankruptcy.

Surplus income will also determine the length of your bankruptcy. If a person has no surplus income and this is a first time bankruptcy, the federal government has regulated that a bankruptcy will be for a period of 9 months. If there is surplus income and it is greater than $200 over the threshold, a first time bankruptcy will be extended 12 months, for a total of 21 months.  A second bankruptcy with surplus income will be extended by 27 months, for a total of 36 months.

Surplus Income Threshold for 2019:

Family Size: 1 $2,203
2 $2,743
3 $3,372
4 $4,094
5 $4,644
6 $5,237
7 $5,831

The monthly surplus income payment is calculated using the following formula:

Net Income after Deductions – Federal Threshold Amount = Surplus Income x 50% = Payment

Example: Jill lives by herself and takes a salary of $2,504 home per month. Here Surplus Income payment, using the formula above, would be: $2,503 (Take home income) – $2,203 (Threshold amount, based on a family size of one person) = $300 x .5 (Surplus income payment is based on 50% of any income over the threshold amount = $150 Therefore, Jill would be required to pay $150 every month in surplus income payments for the duration of her bankruptcy. If her income increases, she will be required to pay more, and if her income decreases, the amount she pays will be less.

Net Income is based on the total take home income of all family members living in the household of the bankrupt.

Deductions include: Child care payments, support payments, medical payments, and other employment expense that are normally deducted when preparing your income taxes.

You can only file for bankruptcy through the help of a federally Licensed Insolvency Trustee like Bromwich+Smith.