What Will You Lose in a Bankruptcy?

Well the good news is that you would not lose everything contrary to the message conveyed by some unscrupulous companies out there. In some cases it may indeed be preferable for an individual to file for bankruptcy rather than negotiate their debts, especially if they earn a low income and have few assets.

When someone files for bankruptcy a trustee in bankruptcy will sell their assets, except those exempted by provincial and federal laws, and hold the proceeds in trust for distribution to their creditors. This includes all existing assets as well as those acquired prior to the discharge of the bankruptcy. The trustee will also take a portion of the bankrupt`s total income based on income standards issued by the Superintendant of Bankruptcy, and personal and financial circumstances.

The assets protected from a bankruptcy are different in each province so I will focus on BC.

So here are the assets that will not be taken in a Bankruptcy:


If the equity in your vehicle is less than $5000 then it is safe. If there is a loan attached to a vehicle then the equity would equal the vehicle value subtract the loan balance subtract selling costs.


A bankrupt person is entitled to keep the first $12,000 equity (for the Lower Mainland) in their real estate property. If there is less than $12,000 equity in the property after subtracting selling costs etc then it is unlikely that the trustee will take the property.


Furniture value up to a cumulative total of less than $4000 will not be taken in a bankruptcy.

Tools of Trade

A sole proprietor will keep tools of their trade totalling a value of less than $10,000. This means that it is possible to file for bankruptcy and keep your business running.

So filing for bankruptcy may be not be as onerous as some may think and could end many years of stress dealing with creditors who just cannot be paid.

It is still a serious decision which should not be taken lightly and the advice of an impartial professional should be sought before taking any action.

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