November 4th, 2009 by Questions
Now RRSP`s are safe but any restrictions on using/cashing in after bankruptcy?
Posted from: British Columbia
One Response to “rrsp use”
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November 05, 2009 at 10:57 am, A licensed trustee said:
Careful, not all RRSPs are exempt. Only RRSP contributions that were made more than 12 months before the date you file for bankruptcy are exempt from seizure.
Once you have been discharged you may make whatever withdrawals your RRSP normally allows.
If you try and withdraw funds during a bankruptcy, they will likely be paid to your trustee for the benefit of your creditors. The funds are exempt while in an RRSP, but once you remove them they are no longer safe.
A final word of warning about RRSPs. If for some reason you end up in Court in order to obtain your Discharge from bankruptcy, the Court may take into account the value of your RRSPs and order some form of additional payment into your bankruptcy. They can’t order you to cash out the RRSPs, but they can order you to make payments equal to the cash out value. The reason I am mention ing this is just to emphasize how important it is to perform all of your duties properly. If you do then your discharge should be Automatic and therefore you won’t have to appear in Court.