Seizable and unseizable property
When you go bankrupt, you must work with your trustee to draw up a list of your seizable property. The property will be used to reimburse your creditors and discharge your debts.
In general, your seizable property is all the property you own at the time of your bankruptcy and any property you acquire before your discharge, excluding any unseizable property. Your seizable property includes:
- surplus personal property such as sports equipment, art, and recreational vehicles;
- road vehicles, except if they are necessary to your work;
- life insurance policies;
- some amounts invested in registered retirement savings plans (RRSPs).
If you own a building or land, your trustee will assess the situation to determine whether it is to your advantage to sell it and pay back your creditors, or let them seize it. The trustee must also agree with you on the date on which you will leave the building, if applicable.
Last, the portion of your income or salary that exceeds the amount needed to provide for your family must be paid to your trustee each month for the duration of the bankruptcy process.
Your unseizable property belongs to you and cannot be seized to reimburse your creditors. The main items in this category are:
- movable property that is for the family's use and is needed for the life of the family (such as furniture, clothing and kitchen utensils), up to a market value of $7,000;
- work instruments needed for the personal exercise of the debtor's professional activities (such as tools);
- lump sum amounts and compensation, other than income replacement indemnities, paid in execution of a judgment or under a public compensation plan covering costs and losses resulting from a person's death or from bodily or moral injury;
- amounts received as child support;
- amounts accrued in some RRSPs (to find our if these amounts are seizable or unseizable you should consult your trustee);
- property declared by the donor or testator to be exempt from seizure.
Your main residence is considered unseizable if the claim against you is for less than $20,000, except if:
- the claim is secured against the property by a prior claim, legal hypothec or a hypothec;
- the claim is for support following a divorce of judgment;
- your main residence has already been seized.
To obtain more information on seizable and unseizable property you should consult a licensed insolvency trustee or a legal advisor.