February 13th, 2007 by Questions

I am considering bankruptcy and I have a couple of questions. First, I withdrew funds from my RRSP a couple of years ago under the Home Buyers Plan, and have 15 years to pay it back. Does going bankrupt eliminate the need to pay these funds back in the future?
Secondly, last year I cashed in my life insurance and was surprised to get a T5 for 2006 for a sizable amount of the surrender value of the policy, which I cannot pay the tax on. Will this effect my bankrupcy in any way?
Is there a time limit from the time you go bankrupt back to the past where I received money from my life insurance?
Thank you for your time.



, A licensed trustee said:

Filing for bankruptcy will not remove your obligation to repay your RRSP for the Homebuyer loan – if you don’t make the required repayments a portion will be added to your income each year by CRA and be treated as taxable income for you.

The tax debt for the insurance proceeds is a debt that bankruptcy will deal with. When you speak to a trustee make certain you tell them about the insurance proceeds (when you received them and what you did with the money) – if there are any issues your trustee will explain them to you at that time.

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