Receiving Severance while in Bankruptcy

August 15th, 2010 by Questions

I am expecting a severance from my previous employer (I am recently retired) any day now and I am currently in the middle of a bankruptcy. The severance will be in excess of $10,000. I also am on a pension which puts me right at the surplus income threshold. I have heard this severance will be safe from my Bankruptcy but I am not sure. Is this considered excess income or is it money I will be able to keep in full? Also, if it is excess/surplus income, if I put in all in an RRSP will it be safe from my bankruptcy? Thank you.

Posted from: Ontario


One Response to “Receiving Severance while in Bankruptcy”

, A licensed trustee said:

You need to speak to your trustee to find out how your severance will be handled. It might be treated as income (and therefore subject to the surplus income rules) or it might be treated as a windfall (and simnply taken for your unsecured creditors). I think it is highly unlikely you’ll be able to keep the entire amount – whomever told you that likely confused this with some other form of payout.

Call your trustee.

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