What Happens To My Assets In Bankruptcy?

A bankruptcy effectively assigns all your non-exempt assets, to a Trustee for distribution to your creditors. While this immediately creates cause for alarm, most individuals who file an assignment in bankruptcy are largely unaffected by this.

If you have significant non-exempt assets, you may find that a consumer proposal is a better solution to addressing your financial challenges.

Practically, an individual who files an assignment in bankruptcy can keep their car, tools, and personal belongings. In Ontario, these exempt assets include:

All necessary clothing
A car worth less than $6,600 in wholesale value
Tools of the trade worth less than $11,300 and tools for farming worth less than $29,100
Household furniture and belongings worth less than $13,150
A principle residence with up to $10,000 in equity
Contributions made to your RRSP or RRIF, except those made in the last 12 months
Many life insurance policies, pensions, and RDSPs
Household furniture and belongings worth less than $13,150

We provide more detail on each of these to help you evaluate the impacts of bankruptcy on your assets. Alternatively, a licensed insolvency trustee is free to meet with you to review the impacts of a bankruptcy on your financial situation and your assets. A free consultation with a licensed insolvency trustee is the only way to know for sure how all of your assets will be treated and receive advice regarding your unique circumstances.

Homes and Condos Savings Accounts Vehicles Taxes

Your home is a special place, and nobody wants to take that from you. For most Canadians, especially with the rise in housing prices, it is the largest asset they own and has the most equity. While a home with a small amount of equity is protected, few homes have this little equity. If you own a home with substantial equity, it may be best to consider a consumer proposal. We have a wealth of information on how your home is treated in a bankruptcy.

We know your savings are important. RESPs, RRSPs, RRIFs, Pensions, and insurance policies are all there to protect your future. Fortunately the most common savings accounts are usually exempt assets. There are so many savings products, so it’s crucial that you have these policies looked at by a qualified licensed insolvency trustee prior to making any decisions. We provide an overview to get you started at our Savings Accounts section.

In Ontario, you are entitled to keep one vehicle (a car or motorcycle) with a wholesale value up to $6,600, after deducting any leases or loans against it. If the equity in your vehicle is more than $6,600, the Trustee will make arrangements with you to pay the difference between the value of the vehicle and the exemption. We have a detailed section of our web site dedicated to more information and examples on how we treat your vehicle.

Your Trustee will file your taxes for you during the year of your bankruptcy and, if it hasn’t already been filed, the year prior to your bankruptcy. Any tax refunds which are payable to you will be taken by the Trustee for your creditors. Any tax owing for income you earned from the date of your bankruptcy until the end of the year, you would have to pay in the normal course. Read more about how we treat your taxes when you file for bankruptcy.

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What happens to my assets in bankruptcy?

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