What assets are exempt from bankruptcy in Canada?
Exempt assets vary by province but typically include: RRSP/RRIF/TFSA balances (except contributions made in the 12 months before bankruptcy), certain household furniture, clothing, tools of the trade, a vehicle up to a set value, and limited home equity. The Canadian bankruptcy system generally protects retirement savings, making it less punitive than in the US. Provincial exemptions are set under each province's civil enforcement or exemption legislation.
Is my RRSP protected in a Canadian bankruptcy?
Yes, with an important exception. Under BIA section 67(1)(b.3), RRSP/RRIF balances held with a life insurance company or through employer-sponsored plans are generally fully exempt. Contributions made within 12 months before the bankruptcy date are NOT exempt — the trustee can 'claw back' these recent contributions. Self-directed RRSPs held at banks or brokerages are protected by provincial legislation, which varies — most provinces protect them, but check your province's specific rules.
Is my home protected in a Canadian bankruptcy?
Only partially, and only up to the provincial exemption limit. If your home equity exceeds the provincial exemption (e.g., $10,000 in Ontario, $40,000 in Alberta), the trustee can force a sale or require you to pay the excess equity to the estate. If your equity is below the exemption, the trustee will typically abandon the property and you keep it — but you must continue paying the mortgage. With significant equity, a consumer proposal is almost always preferable to bankruptcy since you retain all assets.