Can A Person Have Savings During Bankruptcy?

The short answer is “Yes”.

By definition savings can consist of actual cash holdings, RRSPs and other investment products, pensions, and the cash surrender value of insurance policies.  Your bankruptcy trustee will recover any non-exempt portion of your savings for the benefit of unsecured creditors at the time of filing.

Your bankruptcy estate is also made up of funds recovered by your trustee from:

1) non-exempt assets,

2) voluntary & surplus income payments,

3) income tax refunds, and

4) property acquired after your date of bankruptcy but before your date of discharge.

You should discuss these issues with your trustee prior to filing for bankruptcy to determine which assets are exempt or non-exempt from seizure.

Since assets are dealt with prior to filing for bankruptcy, the only other amount that remains to be calculated is surplus income.  The Superintendent of Bankruptcy has guidelines outlining net monthly income thresholds for a person or family necessary to maintain a minimal standard of living in Canada.  Every dollar that a bankrupt family makes above the benchmark set by the government is subject to a surplus income payment of 50% while a person remains bankrupt.  Once the surplus income payments are satisfied, any remaining income can be used by the bankrupt person towards savings or other investment products.

You should meet with a Licensed Insolvency Trustee in bankruptcy for a consultation to get more specific details of how your assets with be dealt with in bankruptcy.

Powell Associates Ltd. is a Licensed Insolvency Trustee. We are experienced, hands-on insolvency practitioners who understand the personal impacts of significant financial stress;

• You won’t be stuck in an assembly line process.

• You will expect and receive prompt responses and resolution of issues from our supportive and experienced team.

• We will review your debt solution options, including filing a consumer proposal or personal bankruptcy.

• We help Canadians with overwhelming debt get fresh financial starts.

Once you file a consumer proposal or personal bankruptcy, we deal directly with your creditors on your behalf. Your unsecured creditors are required to stop contacting you or continuing legal proceedings against you. Contact us for a free consultation.

We offer free consultations to review your financial situation and practical debt resolution options.  Contact us to discuss your situation over the phone, a video chat, or in-person in Saint John, Moncton, Fredericton,  Charlottetown, Dartmouth, or Miramichi.