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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:
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.
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.
