What do I lose if I go bankrupt in Ontario?
Although bankruptcy is governed by federal law, if you go bankrupt in Ontario what you are also allowed to keep items legislated by the Ontario Execution Act.
In Ontario, the bankruptcy exemptions (what you are allowed to keep) include (effective Dec 1, 2015):
- All necessary clothing;
- One motor vehicle worth up to $6,600 (car, truck, etc.);
- $13,150 worth of household furnishings and appliances;
- $11,300 worth of tools of the trade (equipment that you use to earn a living);
- Certain types of life insurance;
- All RRSP, RRIF and SPSP (Deferred Profit Sharing Plan) savings except contributions made in the 12 months before your bankruptcy.
Will I lose my house?
Whether or not you will lose your house depends on the value of your house, and the amount owing on your mortgage. Most people that declare bankruptcy in Ontario and own a house will have a mortgage on the house.
The Ontario Execution Act stipulates that your principal residence is exempt from seizure IF the equity in your home does not exceed $10,000. If the equity does exceed $10,000 then your principal residence is subject to seizure and sale.
In that case you are required to pay the equity in your house if you go bankrupt. (Equity is the difference between the value of the house and the amount owing on the mortgage). For more information read our FAQ What Happens To My House In A Bankruptcy?
Will I lose my car?
If you go bankrupt in Ontario you are allowed to keep one motor vehicle worth less than $6,600. If your car is worth more than $6,600, you are required to pay the amount over that amount to the trustee if you want to keep your car. If your car is leased or has a loan registered against it, the loan amount is subtracted from the value of the car to determine the net value. More information is available in our FAQ What Happens To My Car If I File For Bankruptcy?
What do I do now?
If you are experiencing money problems, we recommend that you call a licensed trustee in bankruptcy to arrange for a personal consultation.
As you can see the rules are complicated, and they can change, so it is crucial that you discuss your property with your Ontario bankruptcy trustee before filing for bankruptcy in Ontario. You should be completely clear on what you can keep if you go bankrupt in Ontario and which property you may lose if you go bankrupt in Ontario.
All Ontario trustees listed on this site provide an initial consultation free of charge. Find a trustee in your area today.