rrsp when filing bankruptcy
personal bankruptcy

Keeping RRSPs When Filing Bankruptcy

There are 2 types of RRSPs: (1) RRSPs set up with a life insurance company; and (2) RRSPs set up anywhere else, like with a bank or mutual fund company.

An RRSP set up with a life insurance company is also called a segregated fund. This type of RRSP will always have a designated beneficiary if the debtor dies. If the beneficiary of the RRSP is the child, grandchild, parent, grandparent, or spouse of the debtor, then the RRSP is exempt from seizure by a trustee in bankruptcy under the Ontario Insurance Act.

Under the Bankruptcy and Insolvency Act, all other RRSPs are exempt from seizure by the trustee. However, any contributions made to an RRSP within the 12 month period preceding the date of bankruptcy must be seized by the trustee for the benefit of the debtor’s creditors.

This post should not be interpreted as legal advice or a legal opinion. Please consult your Fong and Partners Inc. advisor to review your own particular circumstances.

© Copyright Fong and Partners Inc 2010.

Victor is the President of Fong and Partners Inc. He is a Licensed Insolvency Trustee and Chartered Professional Accountant. With over 20 years of experience in the insolvency field, Victor has been involved in both corporate and consumer insolvency engagements. Previously with a large national firm, Victor founded Fong and Partners Inc. in 2007 so that he could dedicate his professional life to help people from all walks of life to deal with their debt.