What Property Is Protected During A Bankruptcy

2016-03-28   minute read

Frederic Lachance


Bankruptcy is a process that releases you from most of your indebtedness by handing over some of your property. In other words, bankruptcy lets you erase your debts and put an end to your indebtedness within a few months. But to do this, you must pay certain amounts of money and give up some of your property to repay your creditors. You must also follow every step of the bankruptcy process.

A Trustee manages your bankruptcy. As part of their duties, the Trustee takes these steps:

  • meets with you, analyzes your financial situation and makes recommendations to you;
  • directs you to other solutions if they are more appropriate for you, such as a Consumer Proposal or voluntary deposit;
  • determines with you what property you must hand over to pay your debts and what you may keep.

The Trustee becomes a kind of broker between you and your creditors during the entire bankruptcy process.

If you have problems with your trustee, you can contact the Office of the Superintendent of Bankruptcy Canada. This is the organization that gives licences to Trustees and has the power to oversee and supervise Trustees.

Delivery of Property

The trustee uses the list of your property to determine with you which property will be sold to pay your creditors. However, some of your property is protected by law, which means it cannot be taken by your creditors or sold.

For example, you can keep these items:

  • your RRIFs and RRSPs, other than the amounts you paid into them less than 12 months before the bankruptcy (some exceptions apply);
  • up to $6,000 of furniture used for your basic needs and those of your family and that is found in your main residence. The Trustee determines the value of each piece of furniture;
  • the food, fuel, towels, sheets and clothing necessary for you and your family;
  • any work equipment you need for your professional activities or occupation, such as a toolbox, computer or even a car;
  • a portion of your salary determined by law.

Sale of Your Property

The Trustee then sells the property you hand over to them. The money from the sale will be distributed to your creditors in the order provided by law. It is also possible to agree with the Trustee to keep your property. If you do this, you will have to pay them what the Trustee would have made by selling it. For example, if the Trustee decides that he would have made $2,000 by selling your car, you can keep it by paying them this amount.

MNP Ltd. offers debt solutions that will free you once and for all of your debt. Our team of Trustees in bankruptcy will help you explore all the debt relief options that are available to you and choose the one that best suits your situation. Our goal is to allow you a fresh start by means of real credit and debt reduction solutions to respond to your concerns as to how you can get out of debt.

The goal of indebtedness solutions that allow a fresh start is to find the option that suits you best.

Consultation icon