Bankruptcy Exemptions in Ontario
What You Are Allowed to Keep When Filing Bankruptcy in Ontario
What You Can Keep When Filing Bankruptcy in Ontario
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 (Provincial Law)
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 $8,578 in equity
- Household furniture, equipment, and food up to $17,091
- Tools or equipment used to earn a living up to $17,362
- 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 $12,997 (some exemptions apply)
*Amount limits are increased each year for inflation. The above figures are for 2026 as set in the Regulations of the Execution Act.
Federal Bankruptcy Exemptions (BIA Section 67)
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.
Keep Your Home with a Consumer Proposal Instead
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.
Frequently Asked Questions About
Bankruptcy Exemptions
What assets can I keep if I file bankruptcy in Ontario?
In Ontario, you can keep all clothing, household furniture up to $17,091, one vehicle up to $8,578, tools to earn a living up to $17,362, home equity up to $12,997, plus most pensions, RRSPs, RRIFs, and life insurance policies.
What assets do I lose I file bankruptcy in Ontario?
Non-exempt assets include TFSAs, mutual funds, jewellery and valuable collections, inheritances received during bankruptcy, second homes, rental properties, tax refunds received in the filing year, and secondary vehicles.
Can I keep my house if I file bankruptcy in Ontario?
You may be able to keep your home when filing bankruptcy in Ontario. If your equity in your principal residence does not exceed $12,997, the home is generally exempt. If your equity exceeds this amount, the non exempt equity will need to be addressed with your Licensed Insolvency Trustee. A consumer proposal may also allow you to keep your home and other assets while dealing with your unsecured debt.
Are my RRSPs protected in bankruptcy?
Yes. Registered Retirement Savings Plans (RRSPs) are generally protected in bankruptcy. However, contributions made during the 12 months before filing for bankruptcy may not be exempt and may have to be paid to your Licensed Insolvency Trustee for the benefit of your creditors.
Do I lose my tax refund in bankruptcy?
Generally, yes. Income tax refunds for the year you file bankruptcy, including both the pre bankruptcy and post bankruptcy portions, generally become part of your bankruptcy estate. Refunds from previous tax years that have not yet been received are also generally paid to your Licensed Insolvency Trustee for the benefit of your creditors.
How are bankruptcy exemption amounts determined in Ontario?
Exemption amounts are set by Ontario’s Execution Act regulations and adjusted annually for inflation. They override federal limits when provincial limits are higher. Federal exemptions in the Bankruptcy and Insolvency Act apply for assets like RRSPs.
5,500+ Top-Rated Reviews
4.9 stars based on over 3600+ reviews
4.9 stars based on over 2000+ reviews
Here to help you
Our federally 🇨🇦 regulated team of Licensed Insolvency Trustees in Ontario can help you get out of debt and in control of your own financial future.
We’ve helped thousands of people and we can help you too.
We know this is stressful, but you’re not alone
