What assets cannot be seized in bankruptcies?

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In Canada, certain belongings stay safe despite bankruptcy thanks to protected assets and bankruptcy exemptions. Your clothes, essential medical aids, furniture, household appliances, and pantry essentials can’t be taken. Even your car and some home equity are secure if they meet provincial limits, alongside RRSPs, RESPs, and RDSPs, except recent contributions. So, while bankruptcy can be intimidating, these protections offer a reassuring safety net.

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Bankruptcy Exemption Question

What assets cannot be seized in bankruptcies? What assets are protected and cannot be seized if I declare bankruptcy in Canada?

From: Anonymous Question
Location: Oshawa, Ontario (ON)
Category: personal bankruptcy

Bankruptcy Exemption Answer

In Canada, certain belongings are safe from being taken during a bankruptcy, providing a bit of relief in tough times. Imagine your personal clothing, essential medical aids, the comfy couch you flop onto, your trusty household appliances, and a pantry stocked up to a certain amount—these are off-limits. Even your set of wheels, as long as it’s valued within your province’s limits, is protected. Plus, some home equity is cushioned too. And if you’ve been diligent about your future, most of your Registered Retirement Savings Plans (RRSPs) , Registered Education Savings Plans (RESPs), and Registered Disability Savings Plans (RDSPs) are also shielded, except for what you’ve put in over the last year. So, while bankruptcy might seem daunting, know that there’s some safety-netting to hold onto.

From: Insider Adam

Office of the Superintendent of Bankruptcy (OSB) Answer

In Canada, certain assets are protected from seizure in bankruptcy. Key protected assets include:

1. Personal Property Exemptions: Under the Bankruptcy and Insolvency Act, you can exempt basic household goods and furnishings needed for day-to-day living, which include clothing, household appliances, and essential tools up to a prescribed value (Cornwall, Section 67).

2. Homestead Exemption: Equity in a principal residence is protected up to a specified limit. This limit may vary by province (C.R.C., c. 369, Section 3).

3. Pension Plans and Certain Retirement Accounts: These accounts are generally protected, including registered retirement savings plans (RRSPs) and pensions, though some exceptions apply (SOR/2007-256, Section 20).

4. Insurance Policies: Proceeds from life insurance and certain other insurance policies may be exempt (C.R.C., c. 368, Section 5).

5. Disability Support: Income received from certain disability benefits is also protected (Bankruptcy and Insolvency Act, Section 67).

For a complete understanding of the specific limitations and conditions of these exemptions, refer to the respective sections of the Bankruptcy and Insolvency Act and the associated regulations.

From: OSB Helper

Related Questions to Protected Assets

Here are the top 5 most frequently asked questions related to assets that cannot be seized in bankruptcies, based on common concerns and search trends:

1. What household items are exempt from seizure in bankruptcy?

• Household furnishings and appliances up to a specified value (e.g., $4,000 in Alberta, $4,500 in Manitoba)[1][4].

2. Can I keep my vehicle if I file for bankruptcy?

• Yes, you can keep one vehicle up to a certain value (e.g., $5,000 in Alberta, $3,000 in Manitoba), unless specific conditions apply[1][4].

3. Are my retirement savings protected in bankruptcy?

• Yes, Registered Retirement Savings Plans (RRSPs), Registered Disability Savings Plans (RDSPs), and other retirement funds are generally exempt, though there may be a clawback period for recent contributions[1][4].

4. Can I keep my tools and equipment necessary for my work?

• Yes, tools of your trade are exempt up to a specified value (e.g., $7,500 in Manitoba, $10,000 in Alberta)[1][4].

5. Are medical aids and necessary medical devices protected in bankruptcy?

• Yes, there is no limit on necessary medical aids required for the debtor or their dependents[1][4].

If you have a question about debt see our debt questions or ask your own debt related question.

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