Each Province in Canada allows you to keep certain assets when you file bankruptcy. In British Columbia, the assets that are exempt from seizure are:
- Household goods valued up to $4,000 (liquidation value not replacement)
- Equity in a vehicle valued up to $5,000*
- Home equity valued up to $12,000 in Greater Vancouver and Victoria and a value of up to $9,000 elsewhere in BC
- RRSPs except for contributions made in the 12 months prior to the bankruptcy filing
- Clothing and medical aids
- Tools used to earn a living valued up to $10,000
*amount is reduced to $2,000 if you are in arrears on child support.
Assets that fall outside of these exemptions are subject to seizure (sold by the Trustee) or redeemed (the bankrupt pays in funds overtime to keep the asset).
Examples of assets that could be seized or redeemed are:
Value of assets in excess of the exemption limits noted above
- Contribution value in your Children’s RESP
- Tax-Free Savings Accounts or other cash assets
- Tax refund in the year of bankruptcy and previous years if not previously filed
A windfall, such as a lottery win or inheritance that is received during the bankruptcy, is subject to seizure by the Trustee and the funds paid to your creditors. In the case where the windfall is more than what you owe, you will receive the remaining amount.