You are permitted to keep some assets in a bankruptcy. These exemptions are set by various federal and provincial laws. For personal bankruptcy in Ontario, the following assets are exempt:
$5,650 worth of personal possessions (clothing, jewelry, sports equipment, etc.);
One motor vehicle worth up to $5,650;
$11,300 worth of home furnishings;
$11,300 worth of tools of the trade;
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.
Where a creditor holds security against any asset, the creditor will normally be allowed to exercise its rights to realize on his security. However, often you can make arrangements with the secured creditor so that you may keep possession of the asset and continue to make payments on the secured loan.
What happens to my other assets?
Upon your assignment in bankruptcy, all of your non-exempt assets automatically vest in the trustee. The trustee has a duty to realize on these assets for the general benefit of your creditors. This includes such assets as non-exempt real estate and vehicles, and financial assets such as RESPs, GICs, term deposits, etc. Personal effects such as jewelry, collectibles, recreational equipment, etc. are also non-exempt and must be turned over to the trustee or you may elect to purchase the value of these assets from the trustee if you wish to keep them.
If you have any questions regarding your assets, contact us today. We are here to help.
