RRSPs and Bankruptcy

Saturday, February 24, 2018 - 01:07

Bankruptcy, Asset Concerns


With the deadline to conribute to RRSPs looming (it's on March 1, 2018), it's a good opportunity to talk about how bankruptcy affects your RRSPs. 

Here's some good new:

RRSPs are exempt assets!

RRSP’s, whether individual or employer sponsored, are yours to keep and are protected from your creditors with the exception of any new contributions in the twelve months leading up to bankruptcy. This is becasue the legislators do not want people who know they are in finanical trouble to stick large amounts of money into an RRSP immediately before they file bankruptcy. 

Another concern that many people have is the fear of losing their income tax refunds, GST cheques and Child Tax Credits if they are to file bankruptcy. Hopefully this eases some of those concerns:

Income tax refunds – Tax refunds for tax years prior to bankruptcy or the year of bankruptcy would be forwarded by the government to your trustee. These refunds form property of the estate and would be available for distribution as a dividend to unsecured creditors.

GST Cheques – GST will automatically be sent to your trustee while you remain in bankruptcy. Future GST cheques will be sent directly to the individual, by the government if you qualify to receive them, once you have been released from bankruptcy.

Child Tax Benefit / Universal Child Tax Benefit – These cheques will continue to be sent directly to you as a part of their income.

Don't let the fear of losing your retirement savings stop you from getting the help you need. If you're struggling, it's important to get help sooner, rather than later. Call 1-800-332-8093 today for a free, no-obligation consultation.