Bankruptcy Services of Collins Barrow Limited - for Calgary and Edmonton, Alberta

Author:		Barb
Date:		January 25 , 2002
Question:		We have a bank loan, charge cards and owe $32000 and owe $8000 in income tax. We have $50,000 in rrsps but owe $33000. Our house has less than $40000 equity. We are having a hard time keeping up and concerned losing any more customers. All our payments are still up to date. When we go bankrupt, what happens with our rrsps? Can they be cashed in and applied against the rrsp loan? After we are discharged are there any conditions on selling our house and moving out of province? We have 2 $2000 cars and a $5000 work van which we paid cash for. Do any of our vehicles have to be sold?


From:		Ann Clarke, Collins Barrow Limited
Date:		January 26, 2002
Answer:		If you file bankruptcy and the RRSP's are held at a bank, the Trustee would collapse the RRSP for the benefit of all creditors and the RRSP loan would be an unsecured debt in the bankruptcy. If you collapse them and pay off the RRSP loan less than 3 months before you file, the Trustee would be obligated to ask the bank to repay the funds to the estate. There is nothing to stop you from selling your house and moving to another province, and it appears your vehicles would be exempt under Alberta law (meaning they don't have to be sold). If you have $50,000 in RRSPs then we may be able to make a proposal to creditors (settle the debt) which would help you avoid a bankruptcy. If you'd like more information about your options please call Collins Barrow Limited in Alberta at 310-8888 or look for a Trustee under "Bankruptcy" in the yellow pages. Ann Clarke phone: (403) 296-2972 aclarke@moneyhelp.ca

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