Ontario Bankruptcy Exemptions

Assets a Bankrupt Person can Keep

cost of a bankruptcyOntario bankruptcy exemptions refer to the equity in the assets you own that can be kept if you decide to declare bankruptcy or sign a proposal with your creditors.

Here is an example: A person who owns a car worth $13,000 has a loan against it in the amount of $7,000. This means that the individual has $6,000 of equity in the automobile. The vehicle exemption in Ontario is $6,600 (effective on December1, 2015) and in this example it would be possible for the person to keep their automobile because the equity ($6,000) is less than the bankruptcy exemption for a vehicle ($6,600).

Ontario is changing its bankruptcy exemptions on December 1, 2015

The changes in the bankruptcy exemptions are:

Asset Class. Limit before Dec 1, 2015. Limit after Dec 1, 2015.
Clothing $5,650 No limit.
Household goods. $11,300 $13,150
Tools of trade $11,300 $11,300
Farmers $28,300 $29,100
Motor vehicle $5,650 $6,600
Home $0 $10,000


Exemptions are in effect for all registered retirement savings plans (RRSP’s, RRIF’s and DPSP’s (Deferred Profit Sharing Plans).

Contributions made in the 12 months prior to the date of bankruptcy will be recovered (clawed back) for the benefit of the bankruptcy estate.

You may have noticed that there is a $10,000 exemption for a home, effective on December 1, 2015.   If you have a home that you want to keep and you have more that $10,000 of equity in the home you can  file a consumer proposal and keep your home.   A consumer proposal must offer the creditors more than they would get in a bankruptcy.   A consumer proposal cannot be for more than 5 years.

If the creditors do not accept the consumer proposal you will not be automatically in bankruptcy.

You can learn more about consumer proposals at this link.

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