Using RRSPs to Avoid Bankruptcy
So you’re in debt, and it is getting out of hand and you are looking at all available options, including cashing in your RRSPs to help avoid bankruptcy. But should you really do this?
RRSP Bankruptcy Protection
RRSPs are exempt from seizure in Ontario. Only the contributions made to your RRSPs for the 12 months before bankruptcy was declared, may be eligible with a bankruptcy. With Bankruptcy in Canada, your RRSPs are protected from bankruptcy. This is to help Canadians with their retirement savings.
RRIF and Bankruptcy
RRIFs are also exempted from seizure in a bankruptcy. Only payments made within the previous 12 months before declaring bankruptcy may be eligible with in a bankruptcy.
Safe Keeping Your RRSPs
Many times, we have seen people cash in their RRSPs, desperately, attempting to pay off their debt. When they end up filing for bankruptcy, the RRSPs are gone – giving them no savings for the retirement years, and having to start saving all over again.
The Canadian government protects your RRSPs and RRIFs from Bankruptcy. Every case will be different, depending on the income levels, debt owing and your RRSPs. Before making a rash decision and cashing in your RRSPs/RRIFs, contact us for a free initial appointment. Registered retirement savings plans RRSPs, provides an important part in the financial planning for many Canadians. RRSPs can be the best retirement sources available, especially for those who do not have a retirement plan with their company. Consequently, RRSP protection is vital for protection so that Canadians are able to enjoy a reasonable living standard in their retirement years.
Get Professional Advice
If you are in financial distress, overwhelmed by debt and considering filing for bankruptcy – before you cash in your RRSPs, consult with David Sklar & Associates, Trustees in Bankruptcy.