Bankruptcy Exemptions & Consumer Proposals in Ontario

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Bankruptcy exemptions in Ontario

If you file for bankruptcy in Ontario, according to Ontario federal law, you are entitled to keep certain items as legislated in the Ontario Execution Act.

 

Under the Bankruptcy and Insolvency Act, there are certain bankruptcy exemptions. To help you understand a bit more about what you can and cannot keep when you declare bankruptcy in Ontario, we’re going to answer those all-important questions about provincial bankruptcy exemptions.

 

Harris & Partners is a specialist Licensed Insolvency Trustee with offices based across Canada. Authorised by the federal government, our specialist licensed insolvency trustees provide debt relief solutions to individuals and businesses struggling to manage their debt.

 

Contact us today for a free consultation with one of our expert bankruptcy trustees and we’ll help you get yourself back on track.

How does a consumer proposal work in Ontario?

Consumer proposals are often seen as an attractive alternative to bankruptcy. Bankruptcy may not be the best option and should always be considered a last resort, dependent on your unique circumstances.

 

A consumer proposal can allow people to keep control of their assets and pay back far less to creditors. This agreement can enable you to pay your debt back in a single monthly payment that you are able to afford. 

 

Your creditors will also not be able to take action against you when a consumer proposal has been agreed and you can spread your repayment period over a number of years to make it easier and more manageable to pay back.

 

If you are based in Ontario and want to find out more about the process of filing a consumer proposal, get in touch with us today.

Ontario bankruptcy exemptions

  • All clothing.
  • One motor vehicle worth up to $6,600.
  • Household furniture up to $13,150.
  • Your principal residence if the equity is valued under $10,000.
  • Most pension plans and some life insurance plans.

How can I find out more?

If you want to find out more bankruptcy exemptions and consumer proposals in Ontario, please contact your local Licensed Insolvency Trustee for further information.

Frequently asked questions

Do I get to keep my house?

If you file for personal bankruptcy in Ontario, whether or not you lose your house is dependent on what your home is valued at and how much mortgage you owe. 

 

According to the Ontario Execution Act, your home will be safe to keep if the equity of it does not exceed $10,000. If it does go over that amount, then it may be seized in the bankruptcy process.

Do I get to keep my car?

In Ontario, you are able to keep one vehicle if it is valued under $6,500 but if it is valued over that, then you will have to pay the excess amount to your trustee to keep the car. If the car has a lease or a loan on it, the loan will be taken from the car’s value to work out a net value.

 

You should consult your trustee for advice. You may have the option to buy back your vehicle if its value is tipping over the threshold and you can pay the difference.

Do I get to keep my savings for retirement?

All company or government pension plans are protected in Ontario, including RRSPs, RRIFs and DPSPs. However, any contributions made in the 12 months prior to filing for bankruptcy are not exempt and can be seized by creditors.

 

For DPSPs, your pension contributions will be safe from seizure if you are still a current employee of the company.

Do I get to keep my wages?

Your wages will not be affected during bankruptcy. Any wages, bonuses or commissions are all considered to be income and are also exempt.

Will my bank account be affected?

When you file for bankruptcy in Ontario, a bank may be able to take funds that you owe in your debt. However, you can work with your trustee to make sure that you have the money to pay for your living expenses such as rent, food and other essentials.

Do I get to keep my work tools and equipment?

Any tools that you currently have that help you to complete work for your occupation – e.g. computers – can be kept if they are valued up to $11,300. 

Do I get to keep my household items?

During a bankruptcy in Ontario, you are entitled to keep items such as a sofa, bed, TV, appliances, rugs, cooking utensils and decorations up to the value of $13,150. 

 

If you are not sure about whether an item is classed as a household good, you should consult your licensed trustee.

Can I keep my clothes?

Clothes are entirely exempt in bankruptcy, regardless of how many you own. Clothes will have little value – unless you are hoarding limited edition designer pieces.

Am I entitled to tax refunds?

After filing for bankruptcy, your licensed trustee will set up a pre-bankruptcy tax return from January 1st up to the date of filing. Any tax refunds from that period or years prior from taxes that haven’t been filed will be paid to the trustee. They will then be distributed amongst creditors.

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