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) - Court Order Enforcement Act/Insurance Act

Registered Savings Plans & Life Insurance

RRSP - Exempt - except for contributions made in last 12 months

RDSP - Exempt

RESP - Not Exempt

Life Insurance - Exempt If beneficiary is spouse, child, grandchild, parent

Home

$12,000 in capital region**

$9,000 everywhere else

Clothing & Personal Effects Exempt - No limits for you or for your dependents.
Household furnishings and appliances $4,000 (Based on reasonable amount that could be obtained by sale of items).
Vehicle $5,000 (reduced to $2,000 if they owe maintenance)
Tools of Trade $10,000 - Cannot be applied to a work vehicle

**capital region – Vancouver, Surrey, Burnaby, Richmond, Coquitlam, Langley, Delta, North Vancouver, Maple Ridge, New Westminster, Port Coquitlam, West Vancouver, Port Moody, Langley, White Rock, Pitt Meadows, Bowen Island, Anmore, Lions Bay, Tsawwassen, Belcarra, Saanich, Central Saanich, North Saaanich, Victoria, Langford, Oak Bay, Esquimalt, Colwood, Sooke, Sidney, View Royal, Metchosin, Salt Spring Island, Juan De Fuca, Southern Gulf Islands

Alberta (AB) - Civil Enforcement Act/Insurance Act

Registered Savings Plans & Life Insurance

RRSP - Exempt

RDSP - Exempt

RESP - Exempt

Life Insurance: Spouse, child, grandchild, parent

Pensions Exempt
Home $40,000 in equity in Principle Residence
Clothing & Personal Effects $4,000
Household furnishings and appliances $4,000 (Based on reasonable amount that could be obtained by sale of items).
Vehicle $5,000
Tools of Trade $10,000

 

Saskatchewan (SK) - The Enforcement of Money Judgments Act/The Saskatchewan Insurance Act

Registered Savings Plans

RRSP - Exempt - Contributions made in last 12 months are not exempt.

RDSP - Exempt

RESP - Not Exempt

Life Insurance - Exempt if beneficiary is spouse, child, grandchild and parent.

Home $50,000 in equity - principle residence
Clothing & Personal Effects $7,500 
Pets $2,000
Household Furnishings & Appliances Exempt
Vehicle $10,000
Tools of Trade Exempt (cannot be applied to a motor vehicle)

 

Manitoba (MB) - Execution Act/Insurance Act

Registered Savings Plans & Life Insurance

RRSP/Any Registered Plan under Federal ITA -All (Registered Retirement Savings Protection Act)

RDSP - Exempt, except contributions made in last 12 months

RESP- Not Exempt

Life Insurance - Exempt if beneficiary is spouse, child, grandchild and parent. *If person to whom exemptions apply dies the exemptions apply if the property is handed to a dependent" should be in the Manitoba

Home

$2,500 if equity in house (Sole Ownership)

$1,500 per person if equity in house (Co-owned/Joint Ownership) (Manitoba Judgements Act)

Clothing Exempt - Necessary clothing and clothing of exempt debtor dependents
Food & Fuel/Cash Equivalent for 6 Months Exempt 
Household Furnishings & Appliances $4,500
Vehicle $3,000
Tools of Trade

Tools of trade

  1. In the case of a farmer all farm machinery, dairy utensils and farm equipment for the next required to operate for the next 12 months, 1 vehicle, animals, seeds, house stables, barns on up to 160 Acres of land.
  2. Any other                                                        

All

 

 

 

$7,500

Ontario (ON) - Execution Act/Insurance Act

Registered Savings Plans & Life Insurance

RRSP/RRIF/LIRA - Exempt - Contributions made in last 12 months are not exempt.

RDSP - Exempt - Contributions made in last 12 months are not exempt.

RESP - Not Exempt

Life Insurance - Exempt if beneficiary is spouse, child, grandchild and parent.

Pensions Exempt (Ontario Pensions Benefits Act)
Home

$10,783 if equity in the house is less than $10,783.

None if equity in house more than $10,783.

Clothing Exempt - Necessary clothing and clothing of exempt debtor dependents
Medical / Dental Aids Exempt 
Household Items $14,180
Vehicle $7,117
Tools of Trade
  1. (In the case of a debtor engaged solely in the tillage of the soil or farming, $31,379 for livestock, fowl, bees, books, tools, and implements and other chattels ordinarily used by the debtor in the debtor’s occupation)
  2. Any other                                                    

$31,379

 

 

$14,405

 

Quebec (QC) - Asset Exemptions In Bankruptcy

Registered Savings Plans - Example: RRSP's, RRIF's Exempt, except for contributions in the 12 months before the date of bankruptcy.
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 of Government Pensions - 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. 
 

 

Prince 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
Work Tools $7,500
Farmers

No limit on grain and seeds or livestock for domestic use by you and your family.

 

 

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
Food & Clothing

Food and fuel required by you and your dependents for 12 months.

Clothing for you and your dependents: $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 & Food Clothing: Exempt. Enough food & fuel for 12 months.
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 & Food Clothing: Exempt. Enough food and fuel for 12 months.
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 & Food. Clothing: Exempt. 

Food, fuel, and other necessities of life for your family for 12 months

Medical / Dental Aids Exempt 
Household Items Up to $200
Vehicle Not Exempt
Work Tools including livestock $600

 

 

Federal Exemptions (Does not Constitute Property of the Bankrupt) – BIA/ ITA/Insurance Act

Property held by the bankrupt in trust

for any other person (must be a legally defined trust)

All

Quarterly GST/HST Tax credit payments

Exempt (Unless there is no dividend to creditors)

Deferred Profit Sharing Plans (Registered)

Exempt except last 12 months of contributions (BIA Rule 59.2 – ITA S147(1)

RRSP

All, except for contributions in last 12 months

RDSP

All, except for contributions in last 12 months

Pension Plans

All, except for contributions in last 12 months

Life insurance

If beneficiary is Spouse, child, grandparent, parent

   
 

 

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.