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Can RESP’s be protected in any way during a bankruptcy? Can they be transferred to the child’s name/account?

Posted from: Ontario

One Response to “RESP’s”

A licensed trustee said...

The short answer is no. Unfortunately, when the government amended the Bankruptcy and Insolvency Act to protect RRSP contributrions they did NOT protect RESP funds.

If you file for bankruptcy you have two options for the RESPs:

1) you can let your trustee simply collapse the plans and the money will be sezied for the benefit of your unsecured credtors; or

2) you may pay an amount equal to the cash value of the RESPs to your trustee (in addition to whatever else you may be required to pay in bankruptcy) and then you may keep the RESPs.

Most people choose the second option so they may keep the RESPs. Discuss this with your trustee BEFORE you decide to file.