RRSP and Bankruptcy

May 6th, 2008 by Questions

Can I take a loan and contribute to my RRSP while being an undischarged bankrupt? If yes , am I required to take the deduction in the year the contribution is made and give my tax refund to the trustee? Posted from: Ontario

Questions

One Response to “RRSP and Bankruptcy”



May 07, 2008 at 7:02 am, A licensed trustee said:

You are permitted to apply for new credit during your bankrutpcy, but you are also required to advise the lender that you are an undischarged bankrupt. Unless yiu are borrowing from a family member it is unlikely you will be approved for the loan during your bankruptcy.

In regards to your tax refund – when you file for bankruptcy your trustee will tell you whether or not they intend to file and seize any refund you may be entitled to during your bankruptcy (not every trustee will take your refund – we don’t for example). If you have assigned your refund to your trustee then they will get decide whether or not to claim the deduction.

Persoanlly, while I applaud your intentuion to save some money – borrowing is not the way to do it. Complete your bankruptcy and then save the money instead of going back into debt.

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