What happens to TFSAs and RRSPs in bankruptcy?


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TFSAs (tax-free savings accounts) and RRSPs in Bankruptcy are treated differently. When filing for bankruptcy, you need to divulge all your assets to the Licensed Insolvency Trustee, and this includes a TFSA. Please note that TFSAs are not protected assets. RRSPs are protected, but RRSPs contributions that have been made 12 months before filing, may not be protected.

When first looking into bankruptcy, a Trustee needs to determine if you are insolvent or not. If you are declared insolvent, then you may be eligible for a consumer proposal or bankruptcy.

With personal bankruptcy

With personal bankruptcy, you are only allowed to keep certain assets that have been exempted by the Ontario Execution Act and in a Consumer Proposal – the individual filing is able to retain all their assets (providing they continue to make all required payments – i.e. mortgage/car loan etc.).

With a consumer proposal 

You may qualify for a Consumer Proposal if you owe less than $250,000 (not including the mortgage on the main home). With a consumer proposal, your get to keep your assets, which includes your tax-free savings account by providing monthly payments in a proposal. Also under a consumer proposal, the unsecured debt you owe is reduced and is paid off in five years or under. Legal action/ collection calls from unsecured creditors stop.

When meeting with a Licensed Insolvency Trustee, it is important to disclose all of your debts and assets, including your RRSPs, TFSA, and so on, as RRSPs and TFSA are treated differently.

Filing for Bankruptcy tends to be the last route after all options have been taken into consideration. Every situation is unique and meeting with a trustee at David Sklar and associates can help you determine the best option for you.

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If you are overwhelmed by debt, call us at 1-844-962-9200 to book a FREE, confidential appointment. We will review your financial situation in detail and discuss all of your options with you. Alternatively, you can fill out the form below and our team will reach out to you. 

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I worked primarily with Christine, who was very friendly and outgoing. She was quick to help me, and explained everything I needed to know very well. She's quick to answer any questions I may have as well. The other members I spoke with were also very kind and jovial, and were happy to help me with anything they could. They made sure my proposal fit within my budget, and got everything going very quickly. I was happy to work with them, and would highly recommend their very friendly service!
Melissa McAllister
Very processional and understanding of my situation. Thanks to all your team.
Luc Valade
Jennifer Norton's exceptional assistance with my consumer proposal was life-changing. Her professionalism, expertise, and dedication were evident from the start. Jennifer's thorough explanations and attention to detail created a tailored proposal that set a clear path to financial freedom. She went above and beyond, advocating for my best interests and providing invaluable support. Thanks to Jennifer, I'm on track to a stress-free financial future. I wholeheartedly recommend her – she's not just a financial expert; she's a life-changer. Thank you, Jennifer!
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Ray Barkley
I had a great experience with Christine from David Sklar & associates. Very professional, and easy to get through. Thank you
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From the moment I sat down in the office, I felt welcome and at ease. Grace Cuffaro was both friendly and highly informative. She is extremely knowledgeable and answered all of my questions in detail, making sure I understood before moving on. I was reassured throughout the process that I was making the right decision and that it was not uncommon nor anything to be ashamed of. I didn't expect my appointments to be such positive experiences, but that's exactly what they've been!
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I was in a tough financial position and found myself searching for relief. I came across David Sklar & Associates page when doing my research on financial advice. The reviews were amazing, but I was concern because I didn’t know what to expect. I made the decision to set up a consultation and had the pleasure to meet with Jennifer Norton. Right from the beginning, she was attentive, knowledgeable, and pleasant to meet with. The experience was painless and very educational. Jennifer made sure I understood my choices, answered my questions, and concerns promptly, in person, over the phone and via email. I’ve been working with Jennifer for a couple months now and I am pleased that Jennifer is the manager handling my file. I would and have recommend Jennifer Norton, David Sklar & Associates to anyone in need of direction regarding finances.
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Jennifer Norton has been the most helpful throughout this truly embarrassing situation that I find myself in. She is informative, understanding, and there is absolutely no judgment. She has handled everything in a very professional and respectful manner and I am SO glad that I have them on my side. Definitely a huge weight off my shoulders.
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