Bankruptcy Exemptions In Ontario
Find out what assets you keep and what you need to sell
What can I keep if I file for bankruptcy?
Canadians are often reluctant to consider bankruptcy in Ontario even when they are in a dire financial situation. They’re concerned that they could lose everything, but that is one of the most common misconceptions about bankruptcy.
Provincial law outlines bankruptcy exemptions in Ontario, assets that are not affected by filing for bankruptcy. Knowing with certainty what you get to keep and what you may have to sell can give you the confidence you need to make the right decision.
Bankruptcy exemptions in Ontario
Bankruptcy exemptions in Ontario are designed to provide a certain level of protection from creditors. A number of personal and essential belongings are protected by bankruptcy laws in Ontario, and you can move forward knowing that they’re safe.
Assets you get to keep:
- All of your clothing
- One motor vehicle worth up to $7,117
- Household furniture, equipment, and food up to $14,180
- Tools or equipment used to earn a living up to $14,405
- RRSP and RRIF contributions except those made in the 12 months before filing for bankruptcy
- Most pensions and life insurance policies
- Equity in your home up to $10,783 (some exemptions apply)
*Amount limits are increased each year for inflation. The above figures are for 2022 as set in the Regulations of the Execution Act.
Bankruptcy exemptions under federal law
In addition to these Ontario bankruptcy exemptions, some property is also protected by federal law. Federal exemptions are laid out in the Bankruptcy and Insolvency Act.
Federal exemptions
- GST/HST credits (other than for unpaid trustee fees)
- Registered Retirement Savings Plans (RRSP)
- Registered Pension Plans (RPPs)
- Pension Plan with Life Insurance
- Locked-In Retirement Accounts (LIRA)
- Registered Disability Savings Plan (RDSP) savings
- Property you hold in trust for another person
Assets You May Have to Sell
Personal bankruptcy is not meant to be a punishment. Assets are sold in order to give your creditors a chance to recoup their losses. Once the proceeds from the sale of non-exempt assets are distributed to your creditors and Surplus Income payments have ended, any remaining funds that you owe are released.
Non-exempt assets include
- Tax-free saving accounts (TFSA)
- Mutual funds
- Cash in your bank account above a reasonable amount required to pay for short-term living costs
- Jewellery, coin collections, and valuable art
- Inheritances
- Second homes or vacation properties
- Rental income properties
- Tax refunds received in the year of filing
- Secondary vehicles
Will I lose my house if I file bankruptcy in Ontario?
The question is one of the most frequently asked we hear as Licensed Insolvency Trustees. Your home is naturally your top priority, but you may be able to clear your debts through insolvency without jeopardizing your home.
An important step is to have your home appraised. This way, you have an accurate assessment of your equity and whether or not you can afford to buy it out and keep your home.
A Consumer Proposal can help you keep your home
If you are concerned about losing your home and the equity that you built in it by filing personal bankruptcy, there is an alternative that will protect your home and your assets, called a Consumer Proposal. A Consumer Proposal is a different way to eliminate your debt, that is a popular alternative when you are earning an income.
Advice on Bankruptcy
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