One of the most common questions I get asked when I meet with people; is will someone come to my home and take all my furniture and belongings if I go bankrupt?
This question comes up as you assign or surrender everything you own to a trustee in bankruptcy, in exchange for relief from your debts. The trustee would then sell your assets to recover funds to repay your creditors or the people you owe money to.
However under Ontario Law certain things are exempt from seizure by a trustee.
So basically, the answer is No. Most provinces have exemptions and in Ontario where I practice there is an Executions Act that prevents assets or things you own under a certain value from being taken and sold in a bankruptcy or a proposal.
For instance, your household furnishings valued at less then $11,300, personal belongings such as, clothing and jewelry valued at less then $5,650 and a car worth less then $5,650. The values are not based upon replacement values but on a liquidation value if you were to sell it at auction. In most cases people do not have household furnishings or personal items worth more then the exemptions unless they have antiques. In the case of a car an appraisal of the vehicle will usually determine the value and if it is exempt. You can discuss the best way to deal with a car when you meet with your trustee.
So don’t worry, when filing for bankruptcy you will most likely not lose everything and will be able to keep personal belongings and your household items.
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