Certain assets, referred to as exempt assets according to federal and provincial laws, are yours to keep even after declaring bankruptcy. These assets include the equity in your house, car, RRSPs, personal belongings, medical equipment, household goods, and work-related equipment. What is permitted to be kept differs by province. Based on the province in which you reside, your Licensed Insolvency Trustee will specify which specific assets you are allowed to keep. For more information, refer to Chapter 7 Business Bankruptcy.
Assets that you are allowed to keep after filing for bankruptcy
If there are any non-exempt assets, you might be able to buy them back from the estate for their full value. For example, if you wanted to keep your $1,000 boat, you might pay your Licensed Insolvency Trustee the same amount to keep the ownership of the asset. As an alternative, in order to get the money connected with this non-exempt asset, the Licensed Insolvency Trustee will be selling the asset to a third party. The profits from the sale of your non-exempt assets, whether acquired by you or by another buyer, will be deposited into your bankruptcy property and utilized to pay off your unsecured creditors.
The statutes of the State control the property exemption to which an individual applying for bankruptcy is entitled. A long list of properties is exempt. This covers the typical and essential personal property that you possess for the majority of bankruptcy filings. These are the top five assets that you can generally keep in case of bankruptcy.
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Homestead
As long as you keep up your mortgage payments on the property, whatever equity you accumulate in your homestead is often protected from creditors and can be kept regardless of filing for bankruptcy. To be confident that any equity in your property is excluded, you should speak with your bankruptcy attorney, as there are a few important exceptions to this rule.
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Your favorite vehicles
Up to a value of $7,000, each person may exempt or protect a car. If a credit union, bank, or lending company has secured your vehicle, you must keep up with loan payments if you want to keep your car after filing for bankruptcy.
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Retirement (401k, 403b, IPERS, & IRA):
For the most part, pension plans are excluded from the law, provided that their employers have properly developed them as ERISA-qualified plans. IRAs are similarly free. Simple annuities and other investments that you may think about retirement accounts could not qualify. To ensure that any of these investments you may have can be retained, speak with your bankruptcy attorney.
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Wildcard exemptions
The Wildcard Exemption enables you to protect any type of tangible property or nonresidential real estate up to a maximum value of $10,250. Furthermore, you are able to protect up to $400 in intangible personal property.
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Additional Exemptions
Retirement benefits and pensions are protected. Personal property like health aids, college savings accounts, and more can also be secured. Benefits from insurance and unemployment compensation are also protected.
Is your current job or Future Employment Affected by Bankruptcy?
If an employer does a credit check or a federal bankruptcy search, it could find details about a recent bankruptcy. The public record may not affect your candidacy for employment. It could be a deal-breaker if the role requires direct access to financial data or government security clearance.
Employers are uncommon to run background checks on present workers; if they do, they will need your consent. Therefore, you do not need to worry too much about bankruptcy hurting your employment if you do not intend to switch jobs.
When a person files for bankruptcy, what happens to their mortgage?
Your home acts as the security for a secured debt, such as a mortgage, which you keep if you make your payments. You lose it if you fail to pay. Of course, that gets tricky with bankruptcy.
