Do I lose all my assets when I file for bankruptcy?

Contrary to popular belief, when you file for bankruptcy, you will not ‘lose everything.’ Each province and territory has its own exemptions to the bankruptcy law that outline which of your assets, and how much equity, you are allowed to retain. There are also certain costs and processes that apply across the country. Let’s take a look at them below.

Can I keep my home?

We understand that your house is likely your most valued possession. There are exemptions that allow you to keep some of the equity in your home when you file for bankruptcy. Generally speaking, however, if you’ve already paid off a large portion of your mortgage (ie. you have built up equity in your home), filing for bankruptcy might not be the best solution for you—the law requires you to use that equity to pay off some of the money you owe to your creditors.

To keep your home after filing a bankruptcy, you would need to pay a Licensed Insolvency Trustee (LIT) the amount of home equity you have—minus any provincial exemptions. Home equity is calculated by subtracting the remaining amount of your mortgage, along with any outstanding taxes you owe, from what your house is currently worth on the market. For example:

For example: Current market value of Bob’s home: $150 000

LESS:

Remaining mortgage amount $130 000
Property tax arrears $600
Total liens $130 600
Bob’s estimated home equity $19 400

 

Depending on which province he lives in, Bob would have to pay up to $19,400 during the bankruptcy process in order to keep his home. This is one of the reasons why bankruptcy is only considered after other debt relief solutions have been explored. If Bob can afford to repay a portion of his debt, but not the full amount of equity in his home, he may wish to consider an alternative to bankruptcy, such as a consumer proposal. A Licensed Insolvency Trustee will be able to explain every option to help Bob choose the best solution that is right for him.

Personal exemptions by province/territory

Each province and territory has its own list of assets and possessions that are protected during bankruptcy. To see what is exempt in your province, choose your province below:

RRSPs

Some provinces have exemptions for RRSPs in bankruptcy. Otherwise, any RRSP contributions made in the last 12 months will be withdrawn to pay your creditors.

Wages and salary

Filing for bankruptcy stops creditors from garnishing your wages. However, if your income is above a certain threshold in any given month, you will have to make surplus income payments during the bankruptcy process. Find out more about surplus income payments.

Tax refunds

When you file for bankruptcy, your Licensed Insolvency Trustee will prepare a pre-bankruptcy tax return from January 1 up to the date you filed. Any tax refunds from that time, or any refunds owing from previous years where you haven’t filed your taxes, will be paid to the LIT to be distributed to your creditors.

Lottery winnings or inheritances

If you win the lottery or receive an inheritance after you’ve filed, but before you’ve been discharged from bankruptcy, that money must be given to the LIT, who will distribute it to your creditors. If the amount you’ve received is greater than the debts you owed, you can keep what’s left after your creditors have been paid off.

Gifts, transfers of property or special treatment

Any gifts or transfers of property you’ve made in the year prior to filing for bankruptcy (five years for related parties) will need to be reviewed by your LIT—and could be reversed by the court. You will also need to advise your LIT of any payments or preferential treatment to your creditors in the three months prior to declaring bankruptcy (12 months for related parties).

For more information about bankruptcy exemptions, you can contact your local BDO office or request a call from a Licensed Insolvency Trustee.

British Columbia Bankruptcy Exemptions

In British Columbia, property exempt from seizure in bankruptcy is set by the provincial government and applies to the equity in an asset. Equity is the difference between the value of the asset and what you owe on the asset.

Exemptions in British Columbia:

  • No limit on clothing for you or your dependents; all clothing is exempt from bankruptcy
  • Household furnishings and appliances up to $4,000
  • One motor vehicle up to $5,000; unless you are behind on child support payments, in which case the limit is $2,000
  • Work tools and work-related property up to $10,000
  • No limit on medical and dental aids for you or your dependents

Exemptions for your home

In British Columbia, homeowners’ exemptions are higher if you live in Vancouver or Victoria. In this case, $12,000 of the equity in your home is protected in Greater Vancouver and the Victoria capital area. Elsewhere in the province, $9,000 in home equity is exempt from bankruptcy. For more information on bankruptcy exemptions in British Columbia, you can request a call from a local Licensed Insolvency Trustee.

Alberta Bankruptcy Exemptions

In Alberta, property exempt from seizure in bankruptcy is set out in the Civil Enforcement Act and applies to the equity in an asset. Equity is the difference between the value of the asset and how much you owe on the asset.

Example: If you have a car worth $10,000 and you owe $6,000 in car loans, the equity you have in the car is $4,000. In Alberta, the exemption for a car is $5,000. In this case, you have equity of $4,000 and your unsecured creditors cannot take this from you when you file for bankruptcy.

Bankruptcy exemptions in Alberta:

  • Enough food for you and your dependants for the next 12 months
  • Clothing for you and/or your dependants up to $4,000
  • Household furnishings and appliances up to $4,000
  • One motor vehicle up to $5,000
  • Tools of your trade up to $10,000
  • No limit on medical and dental aids
  • Your principal residence up to $40,000; if you co-own your home, this amount will be reduced based on how much of the home you own
  • Social allowance, handicap benefit or a widow’s pension as long as the proceeds from the payment are separate from your other funds
  • RRSPs, RESPs and pensions
  • Certain life insurance policies

Bankruptcy exemptions for farmers

Up to 160 acres of land is exempt if your principal residence is located on that land and is part of your farm. Any personal property necessary for your farming operations over the next 12 months is also exempt from bankruptcy. For more information about bankruptcy exemptions in Alberta, please speak to a local Licensed Insolvency Trustee.

Saskatchewan Bankruptcy Exemptions

If you declare bankruptcy in Saskatchewan, you can keep:

  • Clothing and jewelry, up to $7,500
  • All required medical and dental aids
  • All household furniture and appliances
  • One vehicle worth up to $10,000
  • All tools of your trade
  • Up to $50,000 in the value of your home
  • RRSPs, RRIFs and certain pensions (DPSPs)
  • Certain life insurance policies

Bankruptcy exemptions for farmers

  • Enough cash or crops to provide food and fuel for the farmer and his family until the next harvest
  • All livestock, farm machinery and equipment, including one car or truck, for up to 12 months of operations
  • Tools of the trade, including office furniture and equipment, up to $20,000
  • Two bushels of seed per acre of land

For more information about bankruptcy exemptions, contact a Licensed Insolvency Trustee in Saskatchewan.

Manitoba Bankruptcy Exemptions

Example: If you have a car worth $8,000 and you still owe $5,000 on the loan, the equity you have in the car is $3,000. In Manitoba, the exemption for a car is $3,000. In this case, you would be able to keep the equity in your car; your unsecured creditors cannot take this from you when you file for bankruptcy.

Bankruptcy exemptions in Manitoba

  • Furniture and household appliances up to $4,500
  • No limit on clothing for you and your family
  • Food and fuel necessary for you and your family for six months, or the cash equivalent
  • Tools of your trade up to $7,500
  • One motor vehicle up to $3,000 when used for business or transportation to work
  • Articles and furniture necessary to perform religious services
  • No limit on health aids for you or your family
  • If you are the sole owner of your home, up to $2,500 in equity is protected; if you co-own your home, the limit is $1,500

Exemptions for farmers

  • Farm machinery, dairy utensils and farm equipment needed for the next 12 months
  • All animals reasonably necessary for the next 12 months
  • One motor vehicle, if required for your agricultural operations, is completely exempt from bankruptcy
  • The seed sufficient to seed all your land under cultivation
  • Up to 160 acres of farm land
  • The house, stables, barns and fences on your farm, up to 160 acres

For more information on bankruptcy exemptions in Manitoba, speak to a local Licensed Insolvency Trustee.

Ontario Bankruptcy Exemptions

You may be afraid that you will lose everything if you file for bankruptcy, but this is not the case in Ontario. Here are the provincial bankruptcy exemptions that allow you to keep certain assets and possessions.

Bankruptcy exemptions in Ontario

  • No limit on clothes for you and your family
  • Household furniture, utensils, equipment, food and fuel up to $13,150
  • Tools and instruments used by you in your business up to $11,300
  • One motor vehicle up to $6,600
  • If the equity in your home does not exceed $10,000, your home is exempt; if the equity exceeds $10,000, then your home is not exempt from seizure
  • Most pension plans and certain types of life insurance policies
  • RRSPs, except for contributions in the 12 months before the date of bankruptcy
  • For farmers, up to $29,100 for livestock, fowl, bees, books, tools and implements of the trade

For more information on bankruptcy exemptions in Ontario, find a Licensed Insolvency Trustee near you.

Quebec Bankruptcy Exemptions

In Quebec, property exempt from seizure in bankruptcy is set by the provincial government and applies to the equity in an asset. Equity is the difference between the value of the asset and what you owe on the asset. Example: If you have furniture worth $5,000 and you do not owe any creditors for it, the equity you have in these possessions is $5,000. In Quebec, the exemption for this type of property is $6,000. In this case, you would be entitled to keep your furniture; your creditors cannot take it from you.

Personal bankruptcy exemptions in Quebec

  • Household furniture and appliances, up to $6,000
  • Food, fuel, linens and clothing
  • Tools of the trade needed for your work
  • One car required for work
  • Family papers and portraits, medals and other decorations
  • RRSPs (except for contributions made in the last 12 months)

New Brunswick Bankruptcy Exemptions

In New Brunswick, property exempt from seizure in bankruptcy is set by the provincial government and applies to the equity in an asset. Equity is the difference between the value of the asset and what you owe on the asset.

Example: If you have a car worth $6,000 and you still owe $3,000 on the loan, the equity you have in the car is $3,000. In New Brunswick, the exemption for a car is $6,500. In this case, you would be entitled to keep the car and your unsecured creditors cannot take this from you during the bankruptcy process.

Bankruptcy exemptions in New Brunswick

  • Furniture, household furnishings and appliances up to $5,000
  • No limit on clothes for you and your family
  • Enough food and fuel for you and your family for three months
  • Tools used by you in the practice of your trade up to $6,500
  • One motor vehicle up to $6,500, if needed for employment
  • Dogs, cats, and other domestic animals belonging to you
  • No limit on medical or health aids for you and your family
  • Certain government pension plans are exempt from bankruptcy

Farm property exemptions

  • Two horses and sets of harness, two cows, ten sheep, two hogs and 20 fowl, and food for them for six months
  • Seed grain and potatoes required for seeding and planting purposes up to:
    • 40 bushels of oats
    • 10 bushels of barley
    • 10 bushels of buckwheat
    • 10 bushels of wheat
    • 35 barrels of potatoes

Nova Scotia Bankruptcy Exemptions

In Nova Scotia, property exempt from seizure in bankruptcy is set by the provincial government and applies to the equity in an asset. Equity is the difference between the value of the asset and what you owe on the asset.

Example: If you have a car worth $6,000 and you still owe $3,000 on the loan, the equity you have in the car is $3,000. In Nova Scotia, the exemption for a car is $3,000. In this case, you would be entitled to keep the car and unsecured creditors cannot take it from you when you file for bankruptcy.

Bankruptcy exemptions in Nova Scotia

  • No limit on clothes for you and your family
  • No limit on fuel and food for your family
  • Up to $5,000 in household furniture and appliances
  • One motor vehicle up to $3,000; or up to $6,500 if you use it for work
  • All medical and health aids for you and your family
  • Farm equipment, fishing nets, or other tools of your trade up to $1,000
  • No limit on grain and seeds or livestock for domestic use by you and your family

For more information on bankruptcy exemptions in Nova Scotia, contact a local a BDO trustee near you.

Prince Edward Island Bankruptcy Exemptions

On Prince Edward Island, property exempt from seizure in bankruptcy is set by the provincial government and applies to the equity in an asset. Equity is the difference between the value of the asset and what you owe on the asset.

Example: If you have a car worth $6,000 and you still owe $3,000 on the loan, the equity you have in the car is $3,000. In P.E.I., the exemption for a car is $6,500. In this case, you are entitled to keep the car and the creditors included in your bankruptcy claim cannot take it from you.

Bankruptcy exemptions on Prince Edward Island

  • No limit on clothing for you and your family
  • No limit on medical or health aids
  • Any motor vehicle needed for transportation to work up to $6,500, or up to $3,000 if not used for work
  • Household furniture, utensils, equipment, food and fuel up to $5,000
  • Tools used by you in your business or trade, up to $2,000

Farm property exemptions

  • Livestock, fowl, agricultural machinery and equipment up to $5,000
  • Enough seed for up to 100 acres

Newfoundland & Labrador Bankruptcy Exemptions

In Newfoundland and Labrador, property exempt from seizure in bankruptcy is set by the provincial government and applies to the equity in an asset. Equity is the difference between the value of the asset and what you owe on the asset.

Example: If you have a car worth $6,000 and you still owe $4,000 on the loan, the equity you have in the car is $2,000. In Newfoundland and Labrador, the exemption for a car is $2,000. In this case, you would be entitled to keep the car and your unsecured creditors cannot take this from you when you file for bankruptcy.

Bankruptcy exemptions in Newfoundland and Labrador

  • Food and fuel required by you and your dependants for 12 months
  • Clothing for you and your dependants up to $4,000
  • Household furnishings and appliances up to $4,000
  • One motor vehicle up to $2,000
  • No limit on medical and dental aids for you and your dependants
  • Items of sentimental value up to $500
  • All pets are exempt from bankruptcy
  • Up to $10,000 of equity in your home
  • Tools of your trade or business up to $10,000
  • Certain income and pension plans

Farming, fishing and aquaculture (fish farm) exemptions

  • If your primary occupation is farming, personal property (including agricultural products) used by you to earn income are exempt up to $10,000
  • If your primary occupation is fishing, personal property used by you to earn income are exempt up to $10,000
  • If your primary occupation is aquaculture, personal property used by you to earn income are exempt up to $10,000

Yukon Bankruptcy Exemptions

In the Yukon, property exempt from seizure in a bankruptcy is set by the territorial government and applies to the equity in an asset. Equity is the difference between the value of the asset and what you owe on the asset.

Example: If you have household furniture and equipment in your home worth $150 and you do not owe any loans on these items, the equity you have in them is $150. In the Yukon, the exemption for these items is $200. In this case, you would be entitled to keep these possessions and creditors cannot take them from you.

Bankruptcy exemptions in the Yukon:

  • Household furniture, utensils, and equipment up to $200
  • No limit on clothes for you and your family
  • Food, fuel, and other necessities of life for your family for 12 months
  • Livestock, fowl, bees, books and tools used by you or your business up to $600
  • Up to $3,000 of equity in your home

Nunavut Bankruptcy Exemptions

In Nunavut, property exempt from seizure in bankruptcy is set by the territorial government and applies to the equity in an asset. Equity is the difference between the value of the asset and what you owe on the asset.

Bankruptcy exemptions in Nunavut:

  • No limit on household furniture and appliances
  • No limit on clothes for you and your family
  • No limit on medical or dental aids
  • Enough food and fuel for 12 months
  • No limit on hunting tools or tools of the trade
  • Up to $35,000 of equity in your home
  • Certain pensions and life insurance policies

Northwest Territories Bankruptcy Exemptions

In the Northwest Territories, property exempt from seizure in bankruptcy is set out in the Exemptions Act and applies to the equity in an asset. Equity is the difference between the value of the asset and what you owe on the asset.

Example: If you have household furniture and equipment in your home worth $5,000 and you do not owe any outstanding loans on these items, the equity you have is $5,000. In the Northwest Territories, the exemption for the total of these items is $5,000. In this case, you would be entitled to keep these possessions and your creditors cannot take them from you.

Bankruptcy exemptions in the Northwest Territories

  • Household furniture and appliances up to $5,000
  • No limit on clothing for you and your family
  • Enough food and fuel for the next 12 months
  • Hunting tools up to $15,000
  • Your principal residence up to $50,000
  • One vehicle up to $6,000
  • Tools of the trade up to $12,000

Licensed Insolvency Trustees Since 1958