One of the main reasons why people try to avoid filing for bankruptcy in Canada is that unlike a debt solution such as a consumer proposal, bankruptcy forces individuals to surrender at least some of their assets. To be sure, this is a good reason to do one’s best to keep from having to enter personal bankruptcy protection. After all, why give up any of your assets if there is a way to avoid it? Unfortunately, however, many people fall prey to the various causes of bankruptcy and sacrifice many of their assets under the terms of bankruptcy protection. Despite having to surrender SOME of your assets in bankruptcy, it is important to remember that bankruptcy is not designed to be punitive, but restorative. So while it might be a pretty awful experience to go through, Bankruptcy law in Canada is such that if you qualify for bankruptcy, you are allowed to keep much of what you own so that you can support yourself after your bankruptcy is discharged. As such, there are many exemptions in bankruptcy that allow you to keep many of your assets.
Bankruptcy Exemptions in Canada
Although there are guidelines at the federal level that govern the bankruptcy process for every bankruptcy in Canada, each province and territory is allowed some leeway in administering bankruptcy for its own residents. The clearest example of this is seen in that each province and territory establishes bankruptcy exemptions for its residents. Thus, the types and financial amounts of bankruptcy exemptions vary from province to province and territory to territory in Canada.
Common Bankruptcy Exemptions in Canada
Canada’s provinces and territories may all set their own bankruptcy exemptions, but some exemption types are common to most, if not all, of Canada. For example, federal law since 2008 has made Registered Retirement Savings Plans exempt from bankruptcy in every province and territory. What you have saved for retirement in these plans is exempt from bankruptcy, just as your retirement savings are exempt from seizure in debt settlement and other legal debt solutions. However, the contributions you made to these retirement plans in the twelve months before your bankruptcy are not exempt. Still, this excludes most of your retirement savings from having to be surrendered in the process of bankruptcy. In most of the provinces and territories of Canada, the following types of assets are exempt from bankruptcy based on a total worth up to a certain limit that is established by the province. So, for example, a province might exempt one motor vehicle from bankruptcy up to a total worth of $15,000 while another might set the limit at $10,000.
Understand your options
Types of Assets Commonly Exempt from Bankruptcy Across Canada
• home equity
• motor vehicle equity
• tools necessary for one’s vocation
• pets
• necessary food and clothing
Specific Bankruptcy Exemptions in Canada
Here are some of the specific bankruptcy exemptions for each province or territory of Canada.
Alberta Bankruptcy Exemptions
• $4,000 worth of household furnishings and goods
• $5,000 worth of motor vehicle equity
• $10,000 worth of vocational tools
• $4,000 worth of clothing for debtor and family
• $40,000 worth of home equity
• enough food to feed you and your family for one year
• all medical devices
British Columbia Bankruptcy Exemptions
• $4,000 worth of household furnishings and goods
• $5,000 worth of motor vehicle equity
• $10,000 worth of vocational tools
• all essential clothing
• $9,000 worth of home equity ($12,000 in Victoria and Vancouver)
• all medical devices
Manitoba Bankruptcy Exemptions
• $4,500 worth of household furnishings and goods
• $3,000 worth of motor vehicle equity
• $7,500 worth of vocational tools
• all essential clothing
• $2,500 worth of home equity
• enough food to feed you and your family for six months
• all necessary medical devices
New Brunswick Bankruptcy Exemptions
• furniture and appliances with a total worth of no more than $5,000
• professional tools with a total worth of no more than $6,500
• the fuel, food, and clothing, the debtor and his or her dependents need for everyday life
• pets
• one motor vehicle that is worth up to $6,500
• medical devices
• a limited amount of livestock and food to feed it for six months as well as seeds and potatoes necessary to grow limited quantities of grain
Newfoundland and Labrador Bankruptcy Exemptions
• $4,000 worth of household furnishings and goods
• $2,000 worth of motor vehicle equity
• $10,000 worth of vocational tools
• $4,000 worth of essential clothing for debtor and his or her family
• $10,000 worth of home equity
• enough food to feed you and your family for one year
• all necessary medical devices
• all pets
• all necessary fuel for heating for up to one year
• $500 worth of items with sentimental value
Yukon, Northwest Territories, and Nunavut Bankruptcy Exemptions
• $500 worth of household furnishings and goods
• $600 worth of motor vehicle equity and vocational tools
• unlimited clothing for the family
• $3,000 worth of home equity
• enough food to feed you and your family for one year
• all medical devices
Nova Scotia Bankruptcy Exemptions
• all essential household furnishings
• $5,000 worth of household goods
• $3,000 worth of motor vehicle equity ($6,500 if a vehicle is necessary for one’s vocation)
• $1,000 worth of vocational tools
• all essential clothing
• all essential food and fuel for debtor and his or her family
• all necessary medical devices
Ontario Bankruptcy Exemptions
• $11,300 worth of household furnishings and goods
• $5,650 worth of motor vehicle equity
• $11,300 worth of vocational tools
• $5,600 worth of clothing that is essential
• $28,300 worth of farm equity
Prince Edward Island Bankruptcy Exemptions
• $2,000 worth of household furnishings and goods, food and fuel
• $3,000 worth of motor vehicle equity
• all vocational tools
• all essential clothing
• $5,000 of a farmer’s livestock, fowl, and equipment, and enough seed for 100 acres of cultivated land
Quebec Bankruptcy Exemptions
• unlimited food, fuel, and clothing
• $6,000 worth of household furnishings and goods
• all vocational tools
• motor vehicles (no limit)
• up to $10,000 from your principal residence
• all donated or gifted property declared exempt
• all disability benefits
• some salary and wages depending on the number of your dependents
• support awarded as the result of adjudication
• all family medals and awards, papers and pictures
Saskatchewan Bankruptcy Exemptions
• $4,500 in household furnishings
• tools and equipment you need to make a living up to $4,500
• home equity up to $32,000
• one motor vehicle if necessary for one’s business or trade
• clothing with no limit
• required medical devices
Keep Your Assets
At the end of the day, it is better to try staying out of bankruptcy and keep all your assets. Fill out the debt relief application to learn how different debt relief options can help keep you out of bankruptcy.