Contrary to popular belief, you will not “lose everything” by filing for bankruptcy. The Bankruptcy and Insolvency Act works with provincial legislation to protect many personal assets, including your car, furniture and RRSPs, which are often exempt from seizure by the Trustee.
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. Collection agencies often times use this fear-mongering tactic in order to frighten people into paying them rather them filing bankruptcy or making a consumer proposal. Some assets are protected from liquidation in the bankruptcy process. Those assets are called “exemptions”.
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.
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.
