Monthly Annuity - Will I Lose It In A Bankruptcy?

2010-05-20

Linda Paul

Bankruptcy

If your annuity comes from a registered pension plan, the amount in your pension plan would be protected - it cannot be seized in a bankruptcy.  In this situation, your monthly annuity amounts would be treated as income during your bankruptcy.  They would be subject to the Surplus Income Formula that applies in all personal bankruptcies. 

Person talking on their cellphone looking over paperwork

Under that formula, if your monthly income is higher than a certain amount, you're expected to pay an amount into the bankruptcy each month for your creditors.  The intent of the formula is to achieve some fairness between you and the creditors.  Your creditors will be writing off the debts.  In return, if you have the ability to pay, you're expected to pay something into the bankruptcy for your creditors for a limited period of time.

However, there are different types of annuities, so you're best to see a trustee to get some specific advice as to how yours would be treated in a bankruptcy.