Bankruptcy in Ontario, Canada is governed by two primary laws, the Bankruptcy & Insolvency Act of Canada, and the Ontario Executions Act.
The Bankruptcy & Insolvency Act is described in more detail in our article about Bankruptcy in Canada. Most of the rules governing bankruptcy in Ontario are set by the federal Bankruptcy & Insolvency Act and apply across Canada.
However, bankruptcy exemption limits (what you get to keep if you go bankrupt in Ontario) are set by the Ontario Executions Act, and so these rules only apply in Ontario.
In Ontario, if you declare personal bankruptcy, you are permitted to keep the following (assuming you have no liens or loans registered as security against these items):
- One motor vehicle worth up to $5,650;
- Personal belongings, such as clothing and jewellery, worth up to $5,650;
- Normal household goods and furniture worth up to $11,300;
- Items you use in the performance of your job, such as hand tools and equipment if you are a carpenter, worth up to $11,300.
These values are determined based on “garage sale” or liquidation values, not what they would be worth if they were purchased brand new.
For example, if you had your car appraised and it was worth $4,000, and there were no loans or liens registered against the car, you would not lose the car if you filed bankruptcy in Ontario (the rules are different in other provinces). If the car had an appraised value of $7,650 and you declared bankruptcy in Ontario, you could either surrender the car to the trustee, or you could pay the trustee $2,000 and keep your car ($2,000 is the difference between the $7,650 value of the car and the $5,650 exemption limit).
Since in many places in Ontario, outside of the large cities, a car is necessary to get to and from work, this exemption limit exists to allow people to keep their car, even if they file bankruptcy.
Most laws about bankruptcy apply in both Ontario and Canada, as described in our article about bankruptcy in Canada.
