“Life never presents us with anything which may not be looked upon as a fresh starting point.” Andre Gide
In Canada, bankruptcy is not meant to be a punishment—the Bankruptcy and Insolvency Act is designed to repay creditors as fairly as can be managed while allowing you the means to create a fresh financial start.
An “exempt asset” is the term given to assets that are protected during bankruptcy. Federal law designates certain exemptions that hold true no matter where you live in Canada, while each province and territory has its own exempt assets. The initial free consultation with a bankruptcy licensed insolvency trustee will clarify your individual situation.
The exempt assets that cannot be seized to be divided among creditors are:
- Property held in trust for any other person.
- Any property that is exempt by the laws of the province in which the bankrupt resides.
- Goods and services tax credit payments and prescribed payments relating to the essential needs of an individual as are made in prescribed circumstances.
- As of July 2008, RRSP contributions made more than a year prior to bankruptcy being filed are exempt from seizure.
The four main assets that most people are concerned about losing during a bankruptcy are:
- Bank Accounts
Additionally, people worry that they will be forced to sell their household furniture and appliances, tools of the trade, etc. during bankruptcy. But almost every province allows you to keep these items up to a certain dollar value that varies by province or territory. Some provinces protect a certain amount of home equity, others do not. Talk to your licensed insolvency trustee to find out what exemptions apply to you.
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