BC Bankruptcy Exemptions - Assets you keep in a Bankruptcy or a Proposal.

BC Bankruptcy Exemptions
Assets you keep in a Bankruptcy or a Proposal.

By law, you are entitled to keep up to $31,000 of equity in specified assets.

Bankruptcy exemptions or the assets a debtor is allowed to keep in a bankruptcy or a proposal were established as part of the philosophy that an honest but unfortunate debtor deserves a fresh financial start. It is recognized that in order to promote a fresh financial start the debtor has to maintain a degree of dignity and be allowed to keep some equity in key assets so he and his family have a starting point from which to rebuild their financial lives.

Equity is the excess that the value of an asset has over any charges or encumbrances against that asset.

For example, if you have a car worth $10,000 and there is a $6,000 secured debt against it then the equity in the car is $4,000. In BC the exemption for a car is $5,000 so in this example you are entitled to the equity of $4,000 and the unsecured creditors cannot take this.

An individual in British Columbia is allowed to keep the following assets:

Equity in a home in Greater Vancouver or Victoria $12,000

Equity in a home elsewhere in the Province $9,000

Work Tools $10,000

Household Furniture and Effects $4,000

Equity in a Vehicle $5,000

Necessary clothing and all required medical aids Unlimited

Effective July 7, 2008 exemptions are in effect for all registered retirement savings plans (RRSP's, RRIF's and DPSP's (Deferred Profit Sharing Plans).

Contributions made in the 12 months prior to the date of bankruptcy will be recovered (clawed back) for the benefit of the bankruptcy estate for RRSPs in provinces without RRSP exemption laws (BC, Alberta, Ontario, NB, and NS);
There will be no upper cap on the amount of RRSPs that can be protected;
There will be no need to set up the RRSPs in a locked in plan to make them eligible for exemption;
The court will have no jurisdiction to extend the one year claw back period period in an appropriate case.

If you are in arrears on a child maintenance order, the vehicle exemption is reduced to $2,000. Under legislation, certain superannuation (pension) plans, retirement savings plans, life insurance policies and court awards for pain and suffering are also exempt.

BC Harmonized Sales Tax Credit (BCHSTC).

To help offset the impact of the new tax on low-income residents, the province is introducing a new refundable credit program called the BCHSTC. The BCHSTC is an ongoing non-taxable quarterly payment that will be integrated with the Goods and Services Tax Credit (GSTC) and the British Columbia Low Income Climate Action Tax Credit (BCLICATC) payments starting in July 2010.

The Climate Action Tax Credit is exempt from seizure by the trustee. However, the GST/HST tax credit and the BCHSTC will be available to the trustee to the amount necessary to cover trustee fees.