My husband and I are facing bankruptcy as we have accumulated HUGE credit card debt through job loss, moving costs, repairs to our only vehicle, etc. I am still on maternity leave and we have sold our only real asset (older truck) a few months ago. I've also used up my Canada Savings Bonds and I just cashed my small RRSP to try to meet the bills for another month or two. We are going to have to move again, too, for work reasons. Can we use the RRSP funds to cover our day-to-day bills and moving costs, or will we have to repay the funds into the estate if we declare bankruptcy in a couple of months (very likely)? We also have some sporting and camping equipment, and a couple of bicycles which we use to commute to work (all this not really worth very much to liquidate). Do we lose this equipment and bikes if we declare bankruptcy? We live in Alberta - are these items included in the household goods or clothing exemptions? Are the exemptions of $4000 per category for EACH of us (we would each file for bankruptcy), or are they for the whole family unit? What about the equipment we have for our 9-month-old son (stroller, car seat, crib, clothing, toys, etc.) - will we have to liquidate these essentials (most of which were gifts)? Thanks for your help!

If you file for bankruptcy you will need to disclose to the Trustee how much you received for the RRSP and where the proceeds were spent. If the RRSP proceeds are minimal and you use them to pay ongoing living expenses, you will likely not have to pay them back. In Alberta you are each allowed to claim a $4,000 exemption for household furniture and effects. The $4,000 is based on liquidation value so it's very rare for a bankrupt to have to give up any of these goods. Your Trustee will confirm with you regarding your particular situation.

Ann Clarke
phone: (403) 296-2972
aclarke@moneyhelp.ca