Consumers overwhelmed by debt have a number of options for getting their finances back in order. While the requirements for some forms of reducing debt, like credit consolidation, are clear, those for bankruptcy are often misunderstood, causing many people to delay the bankruptcy process.

One of the biggest misconceptions about bankruptcy is that it is meant to be punitive. On the contrary, filing for bankruptcy protects you from creditors and collectors, eliminates many of your debts, and gives you a chance to start fresh.

In exchange for the discharge of some of your debt through bankruptcy, you will be required to assign some of your assets to the trustee. However, Canada’s Bankruptcy and Insolvency Act specifies three exemptions of assets you are allowed to keep, including:

• Property you hold in trust for another entity
• GST credit and prescribed payments pertaining to your household’s basic needs
• Other exempt property as stipulated by the province/territory where you reside

Although the types of assets exempt from seizure are similar across Canada, the amounts of each asset that you are permitted to keep in bankruptcy may vary by province and time. So you should contact your licensed insolvency trustee to identify what you may be allowed to keep when you file for bankruptcy.

What can you keep in Ontario following bankruptcy?

• All personal items and clothing
• Tools and equipment needed for your job (up to $11,300)
• Food, equipment, and furniture in your permanent residence (up to $13,150)
• An automobile (such as a car) worth up to $6,600 (or pay the excess amount to retain the vehicle)
• Some types of life insurance, all RRIF, SPSP, RRSP, and other pension property, with the exception of contributions made in the last 12 months
• Principal residence whose equity (difference between the current value of house and mortgage amount owing) is less than $10,000
• For farmers – fowl, livestock, bees, tools, and other business essentials (up to $29,100)

Keep in mind that these amounts change annually.

How to Proceed

Considering how varied the rules can be, it is important that you consult an Ontario-based licensed insolvency trustee to discuss which of your assets you are allowed to keep after filing for bankruptcy. If you want to retain more of your assets, you can also discuss whether credit consolidation is right for you.