What will you lose if you file bankruptcy?
Many people hear the word “bankruptcy” and automatically think the worst. People assume that if they file bankruptcy, they will lose everything. In most cases, this couldn’t be further from the truth. Most people are able to retain most everything that they own.
Every province has created a list of exemptions, meaning assets that are protected from liquidation in the bankruptcy process. The only time your Trustee would have to seize any assets is if the value of your things (garage sale value, not replacement value) is more than the amount allowed in your province. With that being said, if you have a lot of assets, chances are you will lose most of them. After all, your creditors do have a right to get at least some of their money back. But you won't lose everything.
In Ontario, the bankruptcy exemptions include:
- $5,650 worth of personal possessions (clothing, jewelry, sports equipment, etc.);
- One motor vehicle worth up to $5,650 (car, truck, etc.);
- $11,300 worth of furnishings;
- $11,300 worth of tools of the trade (equipment that you use to earn a living);
- Certain types of life insurance;
- All RRSP, RRIF and SPSP (Deferred Profit Sharing Plan) savings except contributions made in the 12 months before your bankruptcy.
As you can see the legislation has a large number of exemptions available so that when you file bankruptcy you are not left destitute.
Of course this list is a bit generic. If you decide to look into bankruptcy and book a free, no-obligation consultation with us, we will go over this list with you to make sure that you aren’t going to have any issues if you choose to file bankruptcy.
If you are struggling with debt and need help, contact our office for a free initial consultation. We have offices throughout SW Ontario and are open late and on weekends to meet your needs.