Bankruptcy is not designed to be punitive, it’s designed to be restorative. In truth, filing for personal bankruptcy does often means giving up some assets. However, you will not be left destitute. While it might be a challenging experience, the bankruptcy laws in Canada are such that if you qualify for bankruptcy, you are allowed to keep much of what you own to support yourself after your bankruptcy is discharged. Generally, many exemptions in bankruptcy will enable you to keep many of your assets.
Assets Commonly Exempt from Bankruptcy Across Canada
Canada’s provinces and territories each set their own personal 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.
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.
Similarly, listed below are other commonly exempt assets:
- Home equity
- Lottery winnings/inheritance, however, the timing of the windfall does play a factor.
- Motor vehicle equity
- Tools necessary for one’s vocation
- Pets
- Necessary food and clothing
Specific Bankruptcy Exemptions in Canada
Overall guidelines, at the federal level, govern the bankruptcy process for every bankruptcy. However, in Canada, each province and territory is allowed some leeway to administer bankruptcy for its own residents. Therefore, the types and financial amounts of bankruptcy exemptions vary from province to province and territory to territory in Canada.
Accordingly, here are some of the bankruptcy exemptions specific to each province or territory of Canada:
Alberta
- $4,000 worth of household furnishings and goods
- $5,000 worth of motor vehicle equity
- $10,000 worth of occupational tools
- $4,000 worth of clothing for debtor and family
- $40,000 worth of home equity in your main residence
- Enough food to feed you and your family for one year
- All medical devices
British Columbia
- $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, however, it’s $12,000 in Victoria and Vancouver
- All medical devices
Manitoba
- $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
- Medical devices
New Brunswick
- $4,000 worth of furniture and appliances
- $10,000 professional tools
- Fuel, food, and clothing, the debtor and his or her dependents need for everyday life
- Pets
- $2,500 worth of motor vehicle equity
- All medical devices
- $10,000 of your home’s equity can be retained.
- 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
- $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 the 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
- Pets
- Fuel for heating for up to one year
- $500 worth of items with sentimental value
Nova Scotia
- All essential household furnishings
- $5,000 worth of household goods
- $3,000 worth of motor vehicle equity, however it’s $6,500 if a vehicle is necessary for one’s vocation
- $1,000 worth of vocational tools
- Essential clothing
- Essential food and fuel for the debtor and his or her family
- Medical devices
Ontario
- $14,180 worth of household furnishings and goods
- $7,117 worth of motor vehicle equity
- $14,405 worth of vocational tools
- $28,300 worth of farm equity
Prince Edward Island
- $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
- 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, however, it’s according to the number of your dependents
- Support awarded as the result of adjudication
- Family medals and awards, papers and pictures
Saskatchewan
- $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, however, it must be necessary for one’s business or trade
- Clothing with no limit
- Required medical devices
Yukon, Northwest Territories, and Nunavut
- $500 worth of household furnishings and goods
- 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
Keep Your Assets
Often, personal bankruptcy is depicted as a crushing blow rather than the financial reset it actually is. While assets will need to be surrendered, the program was designed in such a way as to be fair to both the debtor and debtee. Generally, it’s best to think of personal bankruptcy as a last resort. while this may be true, there are many debt relief programs available. Before jumping straight to bankruptcy, take time to consider if one of those would be better suited to your financial situation. To that end, fill out the debt relief application to learn how different debt relief options can help keep you out of bankruptcy.