Ontario Bankruptcy Exemptions.

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Ontario Bankruptcy Exemptions.

Ontario Bankruptcy Exemptions or assets you keep in a bankruptcy or consumer proposal are set by the provinces and territories.   Ontario Bankruptcy Exemptions apply to equity in the asset. For example if you have a vehicle worth $16,000 and you owe $10,000 to a bank that has registered security on the vehicle, your equity is $6,000. Since the exemption for a vehicle is $6,600.00 (effective December 1, 2015) you would keep the vehicle and the unsecured creditors cannot touch this.

Ontario will be 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

 

Ontario Bankruptcy 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.


Ontario Bankruptcy Exemptions also apply to people who are not in bankruptcy or have not filed a proposal.

You will have noted that RRSPs are exempt from seizure.   Some people cash in their RRSPs to pay down their debts.    This is usually a bad idea because RRSPs are to provide for your retirement.   Law makers have recognized this and do not expect people to use their RRSPs for debt repayment, otherwise they would not have passed laws to make them exempt.

You will also have noted that there is a $10,000 exemption for a home effective on December 1, 2015.  If you have equity in a home greater than $10,000 a consumer proposal may allow you to keep the home and pay only a portion to what you owe.   Consumer proposals are used very frequently in Ontario.


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Bankruptcy Essentials Book.

Exemptions are included in the Bankruptcy Essentials Book.

This book is a “MUST HAVE” for anyone considering bankruptcy or a proposal or considering using a credit counsellor.

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