Filing a personal bankruptcy does not mean that you will have to surrender all your assets. In fact, most people in BC keep all of their assets following a bankruptcy filing.
When you file for bankruptcy in British Columbia, there are several assets you are automatically allowed to keep, these are called “exempt assets”. The exempt property thresholds in BC are sufficient to completely protect most people’s assets.
Personal bankruptcy also serves as a legal means to protect your assets from creditors.
The Court Order Enforcement Act of BC sets out per person allowances for exempt assets, including allowances for:
- Household items up to a $4,000 value (garage sale value NOT replacement cost)
- A vehicle, or vehicle equity up to a $5,000 value ($2,000 value if the person is behind on child support payments)
- Home equity of up to $12,000 value in Greater Vancouver and Victoria (up to a $9,000 value elsewhere in BC)
- RRSPs up to an unlimited value (except for contributions made in the 12 months prior to bankruptcy)
- Clothing and medical aids up to an unlimited value
- Work tools up to a $10,000 value
Certain life insurance policies and nearly all pension plans are also protected in the event you file a personal bankruptcy.
Inheritances or lottery winnings acquired during the bankruptcy are not considered exempt property.
Even if you have an asset which is worth more than the provincial exemption allowance, you will not necessarily be required to surrender it. For example, filing a Consumer Proposal instead of a personal bankruptcy may allow a person to keep an asset they would otherwise surrender for the benefit of their creditors in a bankruptcy. Alternatively arrangements could be made for you to “pay in” the above-exemption value of the asset in order to keep it.
Meet with a Licensed Insolvency Trustee to learn more about asset exemptions and debt solutions.