What Assets Can You Keep if You Declare Personal Bankruptcy in Canada?

In Canada, the laws governing personal bankruptcy are federal, which means that the law is consistent throughout Canada. But each province has passed unique rules that allow some personal assets, some types of income and specific belongings to be kept away from creditors even if an individual isn’t bankrupt. These rules also act as a safeguarded during the personal bankruptcy process.

A General overview of Exempt Assets in Canada – Bankruptcy or Consumer Proposal.

In Canada, the federal Bankruptcy and Insolvency Act defines three kinds of exemptions:

Property you hold in trust for other persons.
GST credit payments and prescribed payments relating to your family’s essential needs.
Other exempt property defined by the province or territory in which you live.

Outlined below is a summary of the Provincial Exempt Assets.

Exempt Assets (assets you can keep) during a Personal Bankruptcy in each Canadian Provinces and Territories

Alberta – Exempt Property
Statute: Read the Civil Enforcement Act.

RRSP, RDSP, RESP – Exempt
Life Insurance: Exempt with designated beneficiary either Spouse, child, grandchild, parent
Food for a 12 month period.
Clothing up to $4,000
Household furniture and appliances up to $4,000
One motor vehicle up to $5,000
Equity in your principal residence up to $40,000, reduced to your share if you are a co-owner
Tools of your trade up to $10,000
Farm land where your principal source of income is farming, up to 160 acres
Farm property requirements for 12 months operations
Social allowance, handicap benefit or a widow’s pension if the benefits are not intermingled with other funds
Health aids

British Columbia – Exempt Property
Statute: Read the Court Order Enforcement Act and Regulations.

RRSP – exempt except for last 12 months of contributions
RDSP – exempt
RESP – not exempt, contribution portion repayable
Clothing for yourself & your dependants, no dollar limit
Household goods up to $4,000
One motor vehicle up to $5,000 (or $2,000 if you behind on child support payments).
Tools of your trade up to $10,000.
Principal residence (equity) up to $12,000, or $9,00 outside of GVRD
Medical aids

Manitoba – Exempt Property
Statutes: Read the Executions Act and the Judgments Act.

RRSP - Any Registered Plan under Federal ITA -All (Registered Retirement Savings Protection Act)
RDSP - Exempt, except contributions made in last 12 months
RESP- Not Exempt
Life Insurance - Exempt if beneficiary is spouse, child, grandchild and parent. *If person to whom exemptions apply dies the exemptions apply if the property is handed to a dependent" should be in the Manitoba
Food and fuel for six month supply or cash equivalent
personal clothing
Household furniture and appliances up to $4,500
One motor vehicle up to $3,000 where used in employment (no limit for farmers)
Health & medical aids
Tools of your trade up to $7,500
Farm property: buildings and requirements for 12 months operations
Principal residence up to $2,500 (see farm land), or $1,500 if you are a co-owner
Farm land where you reside or cultivate, up to 160 acres
Items needed for religious services
Locked-in pension plans
Municipal or school property

New Brunswick – Exempt Property
Statute: Read the Memorials and Executions Act and the Personal Property Security Act.

RRSP – exempt except for last 12 months of contributions
RDSP – exempt
RESP – not exempt, contribution portion repayable
Food and fuel for a three month period
Personal clothing
Household furniture and appliances: $5,000
One motor vehicle used for employment: $6,500
Tools of your trade: $6,500
Farm animals to specified limits, their feed for six months, and seeds to specified limits.
Health and medical aids
Items needed for religious services
Pets
Pension plans with some exceptions

Newfoundland & Labrador – Exempt Property
Statute: Read the Judgment Enforcement Act and Regulations and the Personal Property Security Act.

Certain Pension Plans and Certain other income
Food and fuel for a twelve month period
Clothing up to $4,000
Household furniture and appliances specific types, up to $4,000
One motor vehicle up to $2,000
Tools of your trade up to $10,000
Farm or fishing or aquaculture property up to $10,000
Principal residence: up to $10,000
Health and medical aids
Pets
Personal items of sentimental value up to $500

Nova Scotia – Exempt Property
Statute: Read the Judicature Act and Regulations and the Personal Property Security Act.

RRSP, RRIF exempt
RESP, not exempt
Certain types of pension
Food and fuel
Personal clothing
Household goods up to $6,500, more in some cases
One motor vehicle up to $3,000, or up to $6,500 if needed for work
Health and medical aids
Tools of the trade up to $1,000
Seeds and livestock for domestic use

Ontario – Exempt Property
Statute: Read the Executions Act.

Updated for 2023 Note amounts will be indexed annually.
Household furniture, appliances up to $14,180.
$10,783 for principle residence, if equity above that amount, then no exemption allowed.
Personal clothing and medical and Dental aids
One motor vehicle up to $7,117
Tools of your trade up to $14,405
In the case of a farmer, livestock, fowl, bees, books, tools and implements and other chattels ordinarily used by the debtor in the debtor’s occupation up to $31,379 for livestock, fowl, bees, books, tools and implements and other chattel.
Most pension plans, life insurance policies, and certain RRSPs

Prince Edward Island – Exempt Property
Statute: Read the Judgment and Execution Act and the Personal Property Security Act.

Food, fuel, household furniture, appliances up to $2,000
Personal clothing
One motor vehicle (needed for occupation) up to $6,500
Tools of your trade up to $2,000
Health and medical aids
Seed for up to 100 acres, other up to $5,000
RRSPs with beneficiary a family member: no dollar limit

Quebec – Exempt Property
Statute: Read the Code of Civil Procedure.

RRSP, RRIF, exempt except for contributions 12 months before a bankruptcy
Pension income (certain types)
Personal clothing
Household furniture and appliances up to $6,000
Motor vehicle, Tools of the Trade, Farm Property, Disability Aids
Accident benefits
Principal residence equity value up to $10,000
Support received through court order, donation, or bequest
Most property declared exempt by a donor or will
Benefits payable and employer contributions under an employer-sponsored pension plan
Family papers and portraits, medals and other decorations, and documents
Food, lodging, and transportation passes received for employment travel

Saskatchewan – Exempt Property
Statute: Read the Exemptions Act and the Saskatchewan Farm Security Act.

Food and fuel cash equivalent of supply until the next harvest
Personal clothing
Household furniture and appliances up to $4,500 (or $10,000 for a farm)
One motor vehicle (needed for occupation)
Tools of your trade up to $4,500
Livestock and equipment for up to 12 months, two bushels seed per acre of land under cultivation, and enough cash or current crop for farming costs to the next harvest
Principal residence equity up to $32,000 (your share) and associated land up to 160 acres
All retirement savings plans: RRSPs, RRIFs, and DPSPs
Certain life insurance policies

In Summary

Registered Retirement Savings Plans (RRSPs)

Certain provinces provide exemptions for RRSPs in the context of bankruptcy. In provinces without such exemptions, any RRSP contributions made within the preceding 12 months may be withdrawn to satisfy your creditors.

Wages and Salary

Initiating bankruptcy proceedings prevents creditors from garnishing your wages. Nonetheless, if your income exceeds a defined threshold in any given month, you may be required to make surplus income payments throughout the bankruptcy process.

Tax Refunds

Upon filing for bankruptcy, your Licensed Insolvency Trustee will prepare a pre-bankruptcy tax return covering the period from January 1 to the date of filing. Any tax refunds from this period, or refunds owed from prior years where tax returns have not been filed, will be directed to the Licensed Insolvency Trustee for distribution among your creditors.

Lottery Winnings or Inheritances

Should you win the lottery or inherit funds after initiating bankruptcy but before receiving a discharge, these funds must be relinquished to the Licensed Insolvency Trustee, who will allocate them among your creditors. If the amount you receive surpasses your outstanding debts, you may retain the remaining sum once your creditors have been fully satisfied.

Gifts, Property Transfers, or Preferential Treatment

Any gifts or property transfers executed within the year prior to filing for bankruptcy (five years for transactions involving related parties) will undergo scrutiny by your Licensed Insolvency Trustee and may potentially be reversed by the court. Additionally, any payments or preferential treatment granted to your creditors in the three months leading up to the declaration of bankruptcy (or 12 months in the case of related parties) must be reported to your Licensed Insolvency Trustee.