One Response to “Tax Free Savings Account & Bankruptcy”
Doug Stuive, CA | Trustee | CIRP said...
When you are filing for bankruptcy it is necessary to disclose all of your assets to the Trustee. The Trustee will help you determine which assets are protected from seizure under provincial or federal legislation and which ones need to come into the bankruptcy estate for distribution to creditors.. Unfortunately, a tax free savings account is not a protected asset. This means in a bankruptcy you would have to surrender this account for the general benefit of your creditors. Depending on your income and debt level, your trustee may recommend that you file a consumer proposal. With this option, your assets do not vest in the trustee and you may be able to keep your TFSA by making monthly payments in a proposal. Disclosing all of your assets and debts is important to make sure you are getting the best advice about your financial situation and will ensure you have few surprises after filing.
When you are filing for bankruptcy it is necessary to disclose all of your assets to the Trustee. The Trustee will help you determine which assets are protected from seizure under provincial or federal legislation and which ones need to come into the bankruptcy estate for distribution to creditors.. Unfortunately, a tax free savings account is not a protected asset. This means in a bankruptcy you would have to surrender this account for the general benefit of your creditors. Depending on your income and debt level, your trustee may recommend that you file a consumer proposal. With this option, your assets do not vest in the trustee and you may be able to keep your TFSA by making monthly payments in a proposal. Disclosing all of your assets and debts is important to make sure you are getting the best advice about your financial situation and will ensure you have few surprises after filing.