Area of Law: Credit, Debt and Bankruptcy
Answer # 0266
What property can I keep after I declare bankruptcy?Region: Ontario Answer # 0266
Filing for personal bankruptcy results in a number of significant consequences. In particular, you may have to give up some of your personal belongings, you will have to fulfill a number of obligations to your Licensed Insolvency Trustee (LIT), you will remain responsible for certain debts that are not cleared by bankruptcy, and your credit rating will be damaged.
Will I lose everything if I file for bankruptcy?
Although some of your personal assets and belongings could be sold by your LIT to partially satisfy your debts, usually personal items and household goods are not affected.
Although the procedure for filing for bankruptcy follows Federal guidelines, each province and territory determines the list of assets that are exempt and the limits on the value of each type of exemption.
- all personal clothing (no limit)
- household furniture, food, fuel and equipment in your permanent home (up-to $13,150)
- motor vehicle (up-to $6,600)
- tools necessary to your work (up-to $11,300)
- certain farm property (up-to $29,100)
- home (up-to $10,000)
- most pension plans and life insurance policies, and all RRSPs (except for contributions in the 12 months before the date of bankruptcy)
Also, things owned entirely by your spouse are exempt. However, if you and your spouse own things jointly, you may have to sell the portion that you own. It is a good idea to discuss these issues with your trustee before you file for bankruptcy.
Gifts and transfers of property before filing for bankruptcy
Any gifts or transfers of property that you may have made just prior to filing for bankruptcy need to be divulged to your LIT and can be reversed by the court. Any transfers you made in the year before you filed for bankruptcy (five years for related parties) will need to be reviewed by your LIT. You will also need to tell your LIT if you made any payments or gave preferential treatment to any of your creditors in the three months before declaring bankruptcy (12 months for related parties).
A criminal record will affect your ability to get a loan, a mortgage, or a job. To erase your criminal record, call toll-free 1-877-219-1644 or learn more at Federal Pardon Waiver Services. It’s easier than you think.
When you are in a situation of financial difficulty, there are many options to consider before filing for bankruptcy. For easy-to-understand debt solutions on your terms, contact our preferred experts 4Pillars and rebuild your financial future. With 60 locations across Canada, they will help you design a debt repayment plan and guide you with compassionate advice. No judgment. For help, visit 4Pillars or call toll-free 1-844-888-0442 .
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