Filing for bankruptcy? Here’s what you can keep …

 In Bankruptcy

Thinking about filing for bankruptcy but worried about what assets you might lose?  Here’s a summary of what you can keep!

The dollar value of the exemption is based on the resale value of the item in as-is where-is condition, not what it would cost you to replace.  Think garage sale or Facebook Marketplace value.  For most people, the exemptions are high enough to cover the entire contents of your household.

Wondering what happens if you house, car, boat or other asset doesn’t seem to be covered by these exemptions?  The Trustee is only interested in the equity in these assets.  If they are financed, you can keep them as long as you can make the payments.  If you have equity above the exemptions, you can talk with a Licensed Insolvency Trustee about your options.  You can still file for bankruptcy, but you might be better off in a consumer proposal.

Exemptions from the Ontario Execution Act:

  • Clothing for you and dependants (necessary for living): no dollar limit
  • Household furnishings and appliances up to $14,180
  • One motor vehicle up to $7,117. If value of vehicle is higher than this, the first $7,117 is exempt from seizure.
  • House/condo (must be principal residence) up to $10,783. If equity is higher than this, the exemption does not apply.
  • Tools and personal property used to earn income (Tools of the Trade) up to $14,405
  • Tools and personal property used in farming up to$31,379

In addition, the Bankruptcy and Insolvency Act sets out other assets you can keep:

  • RRSP, RRIP and RDSP accounts are exempt from seizure except for contributions made in the 12 months prior to the date of bankruptcy
  • Property (assets) you hold in trust for another person. Your Licensed Insolvency Trustee will have to review the documentation to confirm there is a true trust.  Talk to us!
  • Court actions or awards arising with respect to pain and suffering, future medical expenses, and future loss of income falling outside the period of bankruptcy. If you have a personal injury, wrongful dismissal or other ongoing legal action, talk to a Licensed Insolvency Trustee about your specific circumstances.

Under the Insurance Act, you can keep:

  • policies you own where your beneficiary is a spouse, child, grandchild or parent. This applies to whole life and other insurance contracts that have investment components (cash value) with no limit.
  • Note that if you are in bankruptcy and you are the beneficiary of someone else’s life insurance policy and become entitled to a payout, the money would belong to your bankruptcy estate.

Call 1-833-808-8463 today for your free, no obligation consultation or contact us by email.  We’re here to help!

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