During bankruptcy, protecting your assets and preventing personal property loss is essential. Understanding your options can help safeguard your belongings from creditors. Crowe MacKay & Company’s Licensed Insolvency Trustees have outlined various strategies that will help you protect your assets.
Options to Protect Against Property Loss During Bankruptcy
Protection within the Bankruptcy and Insolvency Act
When filing for bankruptcy, the Bankruptcy and Insolvency Act protects certain assets through exemptions. These allow you to keep specific personal property. For instance, you can keep clothing, household furnishings, and tools necessary for your profession. Some exemptions vary depending on your province or territory. Consulting with a bankruptcy professional can help you understand which are relevant to you.
Protect Your Assets: Registered Retirement Savings Plan
Utilizing your Registered Retirement Savings Plan (RRSP) is another way to protect your assets from creditors. In Canada, RRSPs are protected by creditors during bankruptcy. However, there are some restrictions. You may not receive comprehensive protection if you have made contributions within 12 months before filing for bankruptcy. Speaking with a financial advisor or bankruptcy professional can help you better understand if your assets within your RRSP are protected or provide you with solutions.
Transfer Your Assets to Family Members
Transferring assets to a spouse or family member is a common strategy to protect property during bankruptcy. However, it’s essential to tread with caution when employing this method. Transfers made to defraud creditors can be considered in breach of the law. Courts can reverse these transfers, leaving you vulnerable to personal property loss. Always seek out legal guidance before committing to any asset transfers. That way, you can ensure legal compliance.
Negotiate with Creditors
Sometimes, negotiating with creditors can provide an alternative to asset liquidation. That’s where a Consumer Proposal or debt settlement arrangement can come in. With these options, you could agree to repay what you owe. Best of all, you won’t have to lose your assets.
Home Equity and the Bankruptcy Process
If you own a home, you may also be concerned about its protection. The level of protection varies depending on the equity you have in the property. If your equity is minimal or non-existent, it’s less likely that the trustee will try and sell your home. The trustee may sell the property to repay creditors if you have significant equity. Consultation with a bankruptcy professional can help you understand the potential risks.
Ready to Protect Yourself Against Property Loss?
At Crowe MacKay & Company, we have over 60 years of experience and offer free initial consultations. If you have any questions regarding the information above, contact our office today and start your debt relief journey.
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This article has been published for general information. You should always contact your trusted advisor for specific guidance pertaining to your individual needs. This publication is not a substitute for obtaining personalized advice.