Your Assets & Debts

If you are wondering what happens to your assets and debts during or after filling for Bankruptcy or a Consumer Proposal, this list should help answer some of your questions:

  • House: The Trustee can arrange for payments to the estate if there is equity in the house, thereby allowing you to keep your house in bankruptcy.  If you are not current on your mortgage payments and taxes, you may have to re-negotiate your repayment schedule.
  • Car: If you own your car, you can keep up to $5650 and any excess value must be paid to the Trustee in order to keep the car. If you lease the car, you can keep it if you are current on your payments.
  • RRSP: If you have a registered retirement savings plan, you can keep all of the invested funds up to the date of one year prior to filing bankruptcy.
  • Life Insurance: Most life insurance policies are exempt from seizure in Ontario, therefore you will be able to keep your life insurance and continue contributing to the plan while in bankruptcy.
  • Garnished Wages: Garnished wages immediately stop when bankruptcy or a consumer proposal is filed. We will not normally contact your employer unless you need our help to stop a garnishee.
  • Alimony Payments: Alimony must still be paid and payments are not erased by a bankruptcy or consumer proposal.
  • Student Loans: If you have been out of school for more than 7 years, your loans are erased. If you have been out of school for 5-7 years, you can apply for relief on account of hardship. If you have been out of school less than 5 years, your loans remain.
  • Tax Debts: These are included with all other debts in both bankruptcy and consumer proposals. If you owe income taxes that total more than $200,000 and if your tax debts are greater than 75% of your total debt, your bankruptcy discharge must be approved by the courts.
  • Credit Cards: You must relinquish all credit cards upon filing for bankruptcy.