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Exempt vs non exempt assets in bankruptcy

Posted on 3 August 2022

Written by Colin Boulton

Many Canadians considering filing bankruptcy as a form of debt relief can become concerned, thinking that they will lose all of their assets in a bankruptcy. Thankfully, this is not the case. Due to some federal laws laid out by the Canadian government, as well as provincial laws, there are some exceptions to what you have to surrender during a bankruptcy. Even if there are some specific assets that you want to hold on to, the Bankruptcy and Insolvency Act actually offers a form of debt relief that enables you to keep all of your assets while reducing your debt. In this article, we will explain what non exempt property actually is, and share the difference between exempt vs non exempt property when it comes to filing bankruptcy.

Which assets are non exempt in bankruptcy?

When filing for bankruptcy in Canada, you may need to surrender some of your assets if they are considered non exempt property. When it comes to bankruptcy and assets, any non exempt assets will be surrendered to your Licensed Insolvency Trustee. Your Licensed Insolvency Trustee will then coordinate these to be sold so that they can go towards the repayment of your debt to your creditors. This property is known as non exempt assets. It essentially means that if you have any valuable assets and you decide to file for bankruptcy, the assets can be used to pay off some of your debts that would otherwise be cleared once you are discharged from bankruptcy. Some common non exempt assets include the following:

  • A second vehicle
  • Equity in your property
  • A second home or vacation property
  • An inheritance
  • A tax refund on income
  • Collectibles and valuable artwork
  • Investments or stocks that are not protected in a registered account
  • Any money you have in your account above what is considered reasonable to cover your living costs in the short term

Which assets are exempt in bankruptcy?

When it comes to assets you may keep when filing bankruptcy, these are considered exemptions. The idea behind bankruptcy is not to strip you of all your belongings. It is instead to provide a fresh financial future while ensuring your creditors are treated fairly. Both federal and provincial laws have a list of bankruptcy exemption assets which we cover below. These assets are protected from being surrendered to your Licensed Insolvency Trustee. The value of these assets is based on their liquidation or resale value, and their equity after any amount owing. This means that in most bankruptcies, Canadians can keep some of their belongings and household items. Typically exempt assets during bankruptcy include the following:

  • Property held in trust for another person
  • Property exempt by provincial laws
  • GST/HST tax credits
  • RRSPs
  • RRIFs
  • RDSP savings

Bankruptcy exemptions by province

When it comes to exempt vs non exempt assets in bankruptcy, each province has its own laws that enable those filing bankruptcy to keep certain assets. Below, we have listed each of the bankruptcy exemptions by province. These amounts are increased each year in line with inflation.

Bankruptcy exemptions in Alberta

Limitation thresholds are set by the provincial law of Alberta, specifically the Civil Enforcement Act.

ItemValue
Essential foodFor 12 months
ClothingUp to $4,000
Household furnishings and appliancesUp to $4,000
A motor vehicleUp to $5,000
All medical and dental aidsN/A
Principal residence Up to a certain value
Tools for earning an incomeUp to $10,000
Farm propertyUp to 160 acres
Farming equipmentCertain conditions
RRSP, RESP, RDSP balancesExcept for unusual contributions
Life insurance where the beneficiary is a spouse, child, parent, or grandparentN/A
PensionsN/A
Equity in a personal propertyUp to $40,000

Bankruptcy exemptions in British Columbia

Limitation thresholds are set by the provincial law of British Columbia, specifically the BC Exemptions Regulation.

ItemValue
All clothingN/A
Household furnishings and appliancesUp to $4,000
A motor vehicleUp to $5,000 ($2,000 if behind on child support)
All medical and dental aidsN/A
Tools for earning an incomeUp to $10,000
Registered savings plans (RRSP, RRIF), except any contributions made in the last yearN/A
Pensions and certain life insurance policiesN/A
Equity in a personal propertyUp to $9,000 ($12,000 in Vancouver and Victoria)

Bankruptcy exemptions in Manitoba

Limitation thresholds are set by the provincial law of Manitoba, specifically the Manitoba Executions Act.

ItemValue
Essential food and fuel for 1 yearN/A
All necessary clothingN/A
Household furnishings and appliancesUp to $4,500
A motor vehicleUp to $3,000 (must be for business or travel to work)
All health aidsN/A
Tools for earning an incomeUp to $7,500
Certain farm equipment, livestock, tools, seed stockN/A
Up to 160 acres of farmland and related buildingsN/A
Registered savings plans (RRSP, RRIF, DPSP), except any unusual contributionsN/A
Some pensionsN/A
Equity in a personal propertyUp to $2,500 ($1,500 if co-owned)

Bankruptcy exemptions in New Brunswick

Limitation thresholds are set by the provincial law of New Brunswick, specifically the Memorials and Executions Act.

ItemValue
Essential food and fuel for 3 monthsN/A
All necessary clothingN/A
Household furnishings and appliancesUp to $5,000
Tools for earning an incomeUp to $6,500
A motor vehicle, if used for workUp to $6,500
Farm property including animals, feed, and seedN/A
Medical and health aidsN/A
Registered savings plans, including RRSP and RRIFs except contributions made in the last yearN/A
Some government pensionsN/A

Bankruptcy exemptions in Newfoundland

Limitation thresholds are set by the provincial law of Newfoundland, specifically the Judgement Enforcement Act.

ItemValue
Essential food and fuel for a yearN/A
All necessary clothingUp to $4,000
Household furnishings and appliancesUp to $4,000
Items of sentimental valueUp to $500
A motor vehicleUp to $2,000
Tools of trade or business (including farming, fishing, and aquaculture)Up to $10,000
Registered savings plans, including RRSPs, RRIFs, and RDSPsN/A
Equity in your personal residenceUp to $10,000

Bankruptcy exemptions in Nova Scotia

Limitation thresholds are set by the provincial law of Nova Scotia, specifically the Judicature Act.

ItemValue
Unlimited food and fuel for familyN/A
All clothingN/A
Household furnishings and appliancesUp to $5,000
A motor vehicleUp to $6,500
All medical and health aidsN/A
Tools of trade or business (including farming and fishing equipment)Up to $7,500
Feed, seeds, and livestock for domestic useN/A
Registered savings plans, including RRSPs and RRIFs except contributions made in the last yearN/A
Some pensionsN/A

Bankruptcy exemptions in Ontario

Limitation thresholds are set by the provincial law of Ontario, specifically the Execution Act.

ItemValue
Household furniture, equipment, food and fuelUp to $14,180
All clothingN/A
A motor vehicleUp to $7,117
Tools of trade or businessUp to $14,405
Farming animals and equipmentUp to $31,379
Registered savings plans, including RRSPs and RRIFs except contributions made in the last yearN/A
Most pension plans and some life insurance policiesN/A
Principal residence equityUp to $10,783

Bankruptcy exemptions in Prince Edward Island

Limitation thresholds are set by the provincial law of Prince Edward Island, specifically the Judgment and Execution Act.

ItemValue
Household furniture, equipment, food and fuelUp to $2,000
All clothingN/A
A motor vehicleUp to $6,500 if used as transport to work; $3,000 if not
All medical and health aidsN/A
Tools of trade or businessUp to $2,000
Property or tools used for farming or fishingUp to $5,000
Registered savings plans, including RRSPs and RRIFs except contributions made in the last yearN/A
Some pensionsN/A

Bankruptcy exemptions in Quebec

Limitation thresholds are set by the provincial law of Quebec, specifically the Code of Civil Procedure.

ItemValue
All food and fuelN/A
All clothingN/A
Household furniture and appliancesUp to $7,000
A motor vehicle needed for workN/A
All farming exemptN/A
Registered savings plans, including RRSPs and RRIFs except contributions made in the last yearN/A
Some pensionsN/A
Equity in personal residenceUp to $20,000

Bankruptcy exemptions in Saskatchewan

Limitation thresholds are set by the provincial law of Saskatchewan, specifically The Enforcement of Money Judgements Act.

ItemValue
Clothing and jewelryUp to $7,500
All household furniture and appliancesN/A
A motor vehicleUp to $10,000
Tools of trade or businessN/A
Livestock, equipment, feed and seed for farmersN/A
Registered savings plans, including RRSPs and RRIFs except contributions made in the last yearN/A
Some pensions and life insurance including DPSPsN/A
Equity in personal residenceUp to $10,000

Bankruptcy exemptions in Yukon

Limitation thresholds are set by the provincial law of Yukon, specifically the Yukon Exemptions Act.

ItemValue
Food and fuel for a yearN/A
All clothingN/A
Household furniture and appliancesUp to $200
Animals, books, and tools of trade or businessUp to $600
Registered savings plans, including RRSPs and RRIFs except contributions made in the last yearN/A
Equity in personal residenceUp to $3,000

Bankruptcy exemptions in Northwest Territories

Limitation thresholds are set by the provincial law of Northwest Territories, specifically the NWT Exemptions Act.

ItemValue
Food and fuel for a yearN/A
All clothingN/A
A motor vehicleUp to $6,000
Hunting toolsUp to $15,000
Tools of the tradeUp to $12,000
Registered savings plans, including RRSPs and RRIFs except contributions made in the last yearN/A
Equity in personal residenceUp to $50,000

Bankruptcy exemptions in Nunavut

Limitation thresholds are set by the provincial law of Nunavut, specifically the Nunavut Consolidation of Exemptions Act.

ItemValue
Food and fuel for a yearN/A
All clothingN/A
All household furniture and appliancesN/A
All medical and dental aidsN/A
Unlimited hunting and tools of the tradeN/A
Registered savings plans, including RRSPs and RRIFs except contributions made in the last yearN/A
Some pensions and life insurance policies
Equity in personal residenceUp to $35,000

Exempt vs non exempt assets: what happens to your house and car?

The questions we are often asked by most Canadians filing bankruptcy is ‘what happens to my car?‘ and ‘what happens to my house?‘ Both property and cars are considered secured debts. This is where a debt is associated with an asset. If you fail to make repayments on your car or house, your asset may be seized. This makes both a car loan or a mortgage a much less risky loan for the lender. Bankruptcy only clears unsecured debts. If, therefore, you are able to keep up your payments for your home or your car through bankruptcy, you can keep your assets. Filing bankruptcy will not affect your secured debts. Therefore, it is very possible to file bankruptcy and to keep both your car and your home.

What happens to your non-exempt assets when you file a consumer proposal?

A popular bankruptcy alternative is a consumer proposal. A consumer proposal is a legal form of debt settlement, and is the most popular form of debt relief in Canada. A consumer proposal requires a Licensed Insolvency Trustee to help you suggest a monthly repayment figure to put forward that is fair to both you and your creditors. It will be an affordable amount that you repay each month to your creditors over a period of up to five years. Consumer proposals can reduce your debt by up to 80%, and 99% of all consumer proposals filed by Licensed Insolvency Trustees at Spergel are accepted. Much like filing bankruptcy, you will receive debt relief with a consumer proposal, as well as protection from your creditors via a stay of proceedings, putting an immediate end to collection calls and wage garnishments. The primary difference between bankruptcy and a consumer proposal is that you can keep all of your assets, including any non-exempt assets. Learn more about filing a consumer proposal and your assets. Generally speaking, consumer proposals are more straightforward than filing bankruptcy, and any conditions are discussed and laid out upfront. Learn more about life after a consumer proposal.

If you are unsure of which exempt vs non exempt assets you can keep, book a free consultation with Spergel. Our experienced Licensed Insolvency Trustees will review your financial circumstances and advise you on the best pathway for your situation. We will help you to determine which assets you may keep or lose depending on the form of debt relief you choose. Reach out today – you owe it to yourself.

Colin Boulton

Colin Boulton

Colin Boulton is a Chartered Accountant and Insolvency and Restructuring Professional with over 20 years’ experience as an LIT (Licensed Insolvency Trustee). He is also our resident expert on unemployment and wage garnishments and manages Spergel's offices in Eastern Ontario (including Oshawa, Peterborough, Lindsay, Ajax and Scarborough). When not at the office helping clients cross their debt-free finish lines, Colin enjoys training for and participating in triathlons.

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