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RRSPs and Bankruptcy in Richmond

 
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If you are a resident of Richmond, British Columbia and are wondering what will happen to your RRSPs in a bankruptcy, consult the information below:

  • When declaring bankruptcy, you will have a trustee in bankruptcy appointed to your case. The trustee is in charge of taking your assets and giving the profits to your creditors.
  • Most RRSPs are treated like assets and are liquidated in a bankruptcy. Exceptions can be found below:
    1. If your RRSP is locked-in from a previous employment. For example, if you worked for a company with a pension plan, and left for retirement, the accumulated pension entitlement is transformed into a “locked-in” RRSP. Employees cannot cash in, or take money out of RRSPs until they retire.
    2. RRSPs that have a life insurance component. We suggest contacting a professional for help with this exception, as it can often be confusing.

In November 2005, Bill C-55 was passed. The bill proposed that most RRSPs be exempt in a bankruptcy. The bill is currently being written and has not yet been become a part of the law.

It is crucial that you consult a licensed bankruptcy trustee in Richmond to discuss RRSPs. You will want to ensure that you are clear on the current laws in British Columbia. To find a bankruptcy trustee in Richmond, click here.

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