Are you considering filing for bankruptcy? Like many Canadians, you might be under the impression that you lose everything when you file. Contrary to popular belief, this is far from the reality. After all, when bankruptcy is intended to give you a fresh financial future, it isn’t entirely helpful to strip you of all your assets. For this reason, each Province has its own list of bankruptcy exemptions, that enables you to keep a number of essential items including work materials and even a vehicle up to a certain threshold. This list is updated each year. Before you file bankruptcy, it’s essential to understand the exemptions that apply in your Province to protect certain assets. Bankruptcy exemptions vary from one Province to another in Canada, and staying informed about the current regulations is crucial for making informed decisions. In this article, we share a comprehensive overview of bankruptcy exemptions by Province in 2024.
Do you lose all your assets when you file for bankruptcy?
Contrary to popular belief, when you file for bankruptcy in Canada, you will not necessarily lose all your assets. Bankruptcy laws in Canada offer certain exemptions that allow you to keep essential assets needed for daily living and work. These exemptions vary by Province and typically include items such as a portion of equity in your primary residence, basic household furnishings, tools of trade, a vehicle (up to a certain value), necessary clothing, and certain pensions or retirement savings. Any assets that are not exempt, however, may be sold by the trustee to help repay creditors. The specifics of what you can keep and what may be sold depend on your Province’s bankruptcy laws and your individual circumstances. Consulting with an experienced Licensed Insolvency Trustee can provide guidance on how bankruptcy would affect your specific assets, and help you to navigate the process. At Spergel, we have over 34 years’ experience in helping Canadians to gain debt relief. Below, we share the bankruptcy exemptions by Province in 2024, outlining which of your assets, and how much equity, you can keep.
Personal bankruptcy exemptions by Province in 2024
Each Province and territory has its own list of assets and exemptions that are protected during bankruptcy. This list and its values are updated each year. See what is exempt in your Province below:
Alberta bankruptcy exemptions
In Alberta, the assets protected from seizure during bankruptcy proceedings are defined in the Civil Enforcement Act and refer to the equity held in an asset. For instance, if you own a vehicle valued at $10,000 and you owe $6,000 in loans against it, the equity in your vehicle amounts to $4,000. In Alberta, the exemption for a vehicle stands at $5,000. Consequently, with equity of $4,000, your unsecured creditors are unable to claim this portion when you file for bankruptcy. Farmers also benefit from specific bankruptcy exemptions tailored to their needs – if your principal residence is situated on land constituting your farm, up to 160 acres of this land is exempt from bankruptcy proceedings. Additionally, any personal property essential for your farm operations in the coming 12 months is also safeguarded from seizure.
| Asset type | Exemptions |
| RRSP/RRIF/LIRA | Exempt |
| RDSP | Exempt |
| RESP | Exempt |
| Life insurance | Exempt – if beneficiary is spouse, child, grandchild, or parent |
| Pensions | Exempt |
| Home | $40,000 if equity in principal residence |
| Clothing and personal effects | $4,000 |
| Medical/dental aids | Exempt |
| Household furnishings and appliances | $4,000 (based on reasonable amount that could be obtained by sales of items) |
| Pets | N/A |
| Vehicle | $5,000 |
| Tools of the trade | $10,000 |
British Columbia bankruptcy exemptions
In British Columbia, homeowners’ exemptions are elevated for residents of Vancouver or Victoria. In these regions, $12,000 of the equity in your home is shielded within Greater Vancouver and the Victoria capital area. Outside of these areas, $9,000 in home equity is exempt from bankruptcy. For further clarification regarding bankruptcy exemptions in British Columbia, it’s recommended to consult with a local Licensed Insolvency Trustee. They can offer tailored advice and address any concerns specific to your circumstances.
| Asset type | Exemptions |
| RRSP/RRIF/LIRA | Exempt. Contributions in the last 12 months are NOT exempt |
| RDSP | Exempt. Contributions in the last 12 months are NOT exempt |
| RESP | Not exempt |
| Life insurance | Exempt – if beneficiary is spouse, child, grandchild, or parent |
| Pensions | Exempt |
| Home | $12,000 in Vancouver and Victoria; $9,000 everywhere else |
| Clothing and personal effects | Exempt |
| Medical/dental aids | Exempt |
| Household furnishings and appliances | $4,000 |
| Pets | N/A |
| Vehicle | $5,000 (reduced to $2,000 if maintenance is owed) |
| Tools of the trade | $10,000 (cannot be applied to a work vehicle) |
Manitoba bankruptcy exemptions
Farmers in Manitoba also benefit from specific exemptions, including:
- Farm machinery, dairy utensils, and equipment necessary for the upcoming 12 months.
- All animals essential for agricultural operations in the following 12 months.
- One motor vehicle, if vital for agricultural activities, is entirely exempt from bankruptcy.
- Sufficient seed to cover all cultivated land.
- Up to 160 acres of farmland.
- The farm’s dwelling, stables, barns, and fences on properties of up to 160 acres.
| Asset type | Exemptions |
| RRSP/RRIF/LIRA | Exempt |
| RDSP | Exempt. Contributions in the last 12 months are NOT exempt |
| RESP | Not exempt |
| Life insurance | Exempt – if beneficiary is spouse, child, grandchild, or parent. If person to whom exemptions apply dies, the exemptions apply if the property is handed to a dependent (should be in Manitoba) |
| Pensions | Exempt |
| Home | $2,500 in equity if principal residence/$1,500 if property is co-owned |
| Clothing and personal effects | Exempt |
| Medical/dental aids | Exempt |
| Household furnishings and appliances | $4,500 |
| Pets | N/A |
| Vehicle | $3,000 |
| Tools of the trade | If the debtor is a farmer, all farm machinery, daily utensils and equipment to operate for the next 12 months, one vehicle, animals, seeds, horse stables, barns on up to 160 acres of land are exempt. All other, $7,500. |
New Brunswick bankruptcy exemptions
In New Brunswick, exemptions for farm property include:
- Two horses and sets of harnesses, two cows, ten sheep, two hogs, and 20 fowl, along with food for them for a period of six months.
- Seed grain and potatoes required for seeding and planting purposes, up to the following quantities:
- 40 bushels of oats
- 10 bushels of barley
- 10 bushels of buckwheat
- 10 bushels of wheat
- 35 barrels of potatoes
| Asset type | Exemptions |
| RRSP/RRIF/LIRA | Exempt. Contributions in the last 12 months are NOT exempt |
| RDSP | Exempt |
| RESP | Not exempt |
| Life insurance | Exempt – if beneficiary is spouse, child, grandchild, or parent |
| Pensions | Certain types exempt |
| Home | Not exempt |
| Clothing and personal effects | Exempt |
| Medical/dental aids | Exempt |
| Household furnishings and appliances | $5,000 |
| Pets | Exempt |
| Vehicle | $6,500, if required for work |
| Tools of the trade | If the debtor is a farmer, animals, equipment, seeds, up to a certain limit. All other, $6,500 |
Newfoundland & Labrador bankruptcy exemptions
In Newfoundland and Labrador, exemptions for farming, fishing, and aquaculture (fish farm) occupations include:
- If your primary occupation is farming, personal property (including agricultural products) used to generate income is exempt up to $10,000.
- If your primary occupation is fishing, personal property used to generate income is exempt up to $10,000.
- If your primary occupation is aquaculture, personal property used to generate income is exempt up to $10,000.
| Asset type | Exemptions |
| RRSP/RRIF/LIRA | Exempt |
| RDSP | Certain types exempt |
| RESP | Certain types exempt |
| Life insurance | Certain types exempt |
| Pensions | Certain types exempt |
| Home | $10,000 |
| Clothing and personal effects | $4,000 |
| Medical/dental aids | Exempt |
| Household furnishings and appliances | $4,000 |
| Pets | N/A |
| Vehicle | $2,000 |
| Tools of the trade | If farming or fishing, personal property used to earn income up to $10,000. All other, $6,500 |
Nova Scotia bankruptcy exemptions
For further details regarding bankruptcy exemptions in Nova Scotia, it’s advisable to consult with a local Licensed Insolvency Trustee. They can provide personalized advice and address any inquiries you may have.
| Asset type | Exemptions |
| RRSP/RRIF/LIRA | Exempt |
| RDSP | N/A |
| RESP | N/A |
| Life insurance | N/A |
| Pensions | Certain types exempt |
| Home | Not exempt |
| Clothing and personal effects | Exempt |
| Medical/dental aids | Exempt |
| Household furnishings and appliances | $5,000 |
| Pets | N/A |
| Vehicle | $6,500 |
| Tools of the trade | If farming, no limit on grain and seeds or livestock for domestic use by you and your family. All other, $7,500. |
Ontario bankruptcy exemptions
Bankruptcy exemptions in Ontario offer reassurance that you won’t lose all your assets when filing. These Provincial regulations safeguard specific assets and possessions. To gain a deeper understanding of bankruptcy exemptions in Ontario, consider reaching out to an expert Licensed Insolvency Trustee for guidance. Learn more detail about Ontario bankruptcy exemptions.
| Asset type | Exemptions |
| RRSP/RRIF/LIRA | Exempt. Contributions in the last 12 months are NOT exempt |
| RDSP | Exempt. Contributions in the last 12 months are NOT exempt |
| RESP | Not exempt |
| Life insurance | Exempt – if beneficiary is spouse, child, grandchild, or parent |
| Pensions | Exempt (Ontario Pensions Benefits Act) |
| Home | $10,783 if equity in house is less than house |
| Clothing and personal effects | Exempt (includes necessary clothing and clothing of exempt debtor dependents) |
| Medical/dental aids | Exempt |
| Household furnishings and appliances | $14,180 |
| Pets | N/A |
| Vehicle | $7,117 |
| Tools of the trade | If debtor occupation solely tillage of soil or farming (including livestock, bees, books, tools, implements, and other chattels), $31,379. Otherwise, $14,405. |
Prince Edward Island bankruptcy exemptions
In PEI, exemptions for farm property include:
- Livestock, fowl, agricultural machinery, and equipment up to a value of $5,000.
- Sufficient seed for up to 100 acres of land.
| Asset type | Exemptions |
| RRSP/RRIF/LIRA | Exempt |
| RDSP | N/A |
| RESP | N/A |
| Life insurance | N/A |
| Pensions | Certain types exempt |
| Home | Not exempt |
| Clothing and personal effects | Exempt |
| Medical/dental aids | Exempt |
| Household furnishings and appliances | $5,000 |
| Pets | N/A |
| Vehicle | $6,500 if used for work transportation. $3,000 if not used for work |
| Tools of the trade | If farming or fishing, personal property used to earn income up to $5,000. All other, $2,000 |
Quebec bankruptcy exemptions
| Asset type | Exemptions |
| RRSP/RRIF/LIRA | Exempt. Contributions in the last 12 months are NOT exempt |
| RDSP | Exempt. Contributions in the last 12 months are NOT exempt |
| RESP | Not exempt |
| Life insurance | N/A |
| Pensions | Exempt |
| Home | Not exempt |
| Clothing and personal effects | Exempt |
| Medical/dental aids | Exempt |
| Household furnishings and appliances | $6,000 |
| Pets | N/A |
| Vehicle | Exempt if used for work transportation. No amount set, but anything over $10,000 wouldn’t be permitted by a Licensed Insolvency Trustee |
| Tools of the trade | Exempt |
Saskatchewan bankruptcy exemptions
In Saskatchewan, farmers’ bankruptcy exemptions encompass provisions tailored to their unique needs:
- Adequate cash or crops to sustain the farmer and their family until the subsequent harvest.
- All livestock, farm machinery, and equipment, along with one car or truck, required for up to 12 months of operations.
- Tools essential for the trade, inclusive of office furniture and equipment, valued at up to $20,000.
- Two bushels of seed per acre of land.
For further details regarding bankruptcy exemptions, it’s advisable to consult with a local Licensed Insolvency Trustee. They can provide personalized guidance and address any inquiries you may have.
| Asset type | Exemptions |
| RRSP/RRIF/LIRA | Exempt |
| RDSP | Exempt |
| RESP | Not exempt |
| Life insurance | Exempt – if beneficiary is spouse, child, grandchild, or parent |
| Pensions | Exempt |
| Home | Up to $50,000 in equity – principal residence |
| Clothing and personal effects | $7,500 |
| Medical/dental aids | Exempt |
| Household furnishings and appliances | Exempt |
| Pets | $2,000 |
| Vehicle | $10,000 |
| Tools of the trade | Exempt (excludes a work vehicle) |
It’s important to note that bankruptcy exemptions are subject to change, and it’s advisable to consult with an experienced Licensed Insolvency Trustee to understand how these exemptions apply to your specific situation. Additionally, some assets may be exempt under federal law, such as registered retirement savings plans (RRSPs) and certain pensions. Understanding bankruptcy exemptions can help you protect essential assets while navigating the bankruptcy process.
Bankruptcy exemptions by Province in 2024: FAQs
Here are some of the questions we receive most regarding bankruptcy exemptions by Province in 2024:
Can I keep my home when I feel bankruptcy?
In Canada, whether you can keep your home when filing for bankruptcy depends on various factors, including the equity you have in the property and the bankruptcy exemptions available in your Province. Equity refers to the difference between the value of your home and any outstanding mortgage or loans secured against it. Each Province sets its own exemptions that determine which assets you can retain during bankruptcy proceedings. Typically, Provinces provide exemptions for a certain amount of equity in your primary residence, allowing you to keep your home up to that specified limit. However, if the equity exceeds the exemption threshold, your Licensed Insolvency Trustee may require you to sell your home to repay creditors. At Spergel, we understand the idea of filing bankruptcy can feel intimidating, which is why we’re here to work with you every step of the journey, and will explore all your available options. We’ll provide you with personalized advice based on your specific situation and help you understand the implications of filing for bankruptcy on your home ownership. For many Canadians, filing a consumer proposal is a great bankruptcy alternative that enables you to keep your home.
What is exempt from bankruptcy in Canada?
In Canada, certain assets are exempt from seizure during bankruptcy proceedings, providing individuals with essential protections. These exemptions vary by Province but typically include necessary items such as clothing, household furnishings, medical aids, tools of trade, and a primary vehicle up to a specified value. Additionally, equity in a primary residence up to a certain limit is often protected, allowing individuals to maintain their homes in many cases. Other exemptions may include certain pensions, registered retirement savings plans (RRSPs), and life insurance policies. These exemptions aim to ensure that individuals undergoing bankruptcy retain essential assets needed for daily living and work, while also facilitating their financial rehabilitation.
How can I avoid bankruptcy in Canada?
Avoiding bankruptcy in Canada involves proactive financial management and seeking assistance when facing financial difficulties. Firstly, creating and sticking to a realistic budget can help manage expenses and prioritize debt repayment. It’s crucial to communicate with creditors to negotiate payment plans or settlements if struggling to meet obligations. Exploring debt consolidation options, such as a debt consolidation loan or debt management program, can streamline payments and reduce interest rates. Consulting with a Licensed Insolvency Trustee can provide guidance on debt management strategies and explore alternatives to bankruptcy, such as a consumer proposal. Ultimately, early intervention, responsible financial habits, and seeking professional advice can help individuals navigate financial challenges and avoid the need for bankruptcy.
Can you leave Canada during bankruptcy?
During bankruptcy proceedings in Canada, leaving the country can have implications depending on various factors and the stage of the process. Generally, individuals are allowed to travel outside of Canada during bankruptcy, but certain conditions may apply. If you intend to leave the country for an extended period, you must inform your Licensed Insolvency Trustee and seek permission from the court. Your trustee may impose conditions or restrictions, such as providing contact information, maintaining communication, or returning for court appearances if required. Failure to comply with these conditions could have serious consequences, including delaying the discharge from bankruptcy or even dismissal of your bankruptcy altogether. It’s essential to communicate openly with your Trustee and adhere to any requirements to ensure a smooth bankruptcy process and avoid complications.
Can creditors take your car in Canada?
In Canada, creditors typically cannot seize your car solely because you owe them money. However, if you default on a car loan or fail to make payments, the lender may repossess the vehicle through legal means. Additionally, if you file for bankruptcy, the equity in your car may be subject to seizure by the trustee to repay creditors, depending on the bankruptcy exemptions in your Province. These exemptions protect a certain amount of equity in essential assets, including vehicles, but if the equity exceeds the exempted amount, the trustee may sell the car to satisfy debts. It’s essential to understand your rights and obligations regarding car ownership, loan agreements, and bankruptcy laws to protect your assets and navigate financial challenges effectively. Consulting with a Licensed Insolvency Trustee can provide personalized advice based on your specific situation and help you understand the implications for your car in the event of bankruptcy.
How do bankruptcies work in Canada?
Bankruptcy in Canada is a legal process designed to provide relief to individuals overwhelmed by debt. It typically begins with the debtor filing a bankruptcy petition with a Licensed Insolvency Trustee. Upon filing, an automatic stay of proceedings goes into effect, halting most collection actions by creditors. The debtor must then disclose all assets, liabilities, income, and expenses to the trustee, who administers the bankruptcy estate. The Trustee may liquidate non-exempt assets to repay creditors and distribute funds according to the Bankruptcy and Insolvency Act. Throughout the bankruptcy period, which typically lasts nine months for first-time bankruptcies, the debtor is required to fulfil certain obligations, such as attending credit counselling sessions and providing monthly income statements. Once the bankruptcy is discharged, the debtor is released from most debts, although certain obligations, such as child support and student loans, may persist. While bankruptcy offers a fresh start, it also has long-term consequences, including damage to credit and restrictions on obtaining credit in the future. Therefore, individuals considering bankruptcy should seek advice from a Licensed Insolvency Trustee to explore all available options and understand the implications of bankruptcy on their financial situation.