What can they take during bankruptcy in Canada—and what can you keep?

Most Canadians assume that filing for bankruptcy means losing everything they own. That assumption is wrong. In Canada, bankruptcy doesn’t mean losing everything—federal and provincial exemption laws define what creditors can and cannot take.

Every province and territory maintains a specific list of bankruptcy exemptions that protect essential assets from seizure, and many of those protections are far more generous than people expect. You can typically keep a vehicle, your household furniture, clothing, medical devices, tools you need for work, food supplies, certain retirement savings, and in many provinces, equity in your home up to a set threshold. The exact dollar limits vary by province, but the underlying principle is consistent across the country: bankruptcy exists to give you a fresh start, not to leave you destitute.

What creditors can take in bankruptcy

Before reviewing what’s protected, it helps to understand what a Licensed Insolvency Trustee (LIT) and your creditors can claim. Under the federal Bankruptcy and Insolvency Act (BIA), when you file for bankruptcy, non-exempt assets become part of your bankruptcy estate. Put simply: When you file, a court-appointed trustee reviews everything you own. Assets protected by law remain yours. Anything above those limits may be sold, and the money goes to your creditors.

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Assets and income that creditors can typically claim include:

• Account balances. Money sitting in your chequing or savings account is usually not exempt. If you also owe money to a certain financial institution, they may seize funds once you file.
• Tax refunds. Your trustee files your tax returns for the year you go bankrupt. Any refund you’re owed, from that year or earlier, goes to your creditors—not to you.
• Assets above your province’s limits. If something you own is worth more than your province allows you to keep—like a car or home with too much equity—the excess can be sold and the money goes to creditors.
• TFSAs, RESPs, and other investments. Unlike RRSPs, these accounts are generally not protected. Your trustee can claim the money in them.
• Recent RRSP contributions. Money you put into your RRSP within the last 12 months or so before filing for bankruptcy isn’t protected and can be taken back for creditors. Older contributions stay safe.
• Windfalls during bankruptcy. Lottery winnings, inheritances, or other unexpected money you receive after you file—but before you’re discharged—go to your creditors.
• Surplus income payments. You keep your paycheque, but if your household income is above a federal threshold, you’ll make extra monthly payments during bankruptcy. That money goes to creditors too.

“If you are worried about your stuff being taken away when you file for bankruptcy, the reality is that nobody gets that visit,” says Jeremy Kroll, a Licensed Insolvency Trustee and partner at Baigel Corp. “But if you’re worried about it, speak to a trustee about your concern and, more often than not, you will find your worry was unfounded.”

Which assets are exempt from bankruptcy? 

Bankruptcy exemptions are the assets provincial and federal law protect from seizure. What you can keep depends on your province or territory. Each sets its own dollar limits on top of federal rules under the BIA.

Below are 10 assets Canadians are often surprised to learn they can keep, along with the provincial rules that make it possible.

Can you file bankruptcy and keep your car in Canada?

Arguably the biggest misconception about Canadian bankruptcy is that you will automatically lose your car.

"The most common urban myth about bankruptcy is people think they will lose their car,” Kroll explains. “Their car is usually financed and valued at close to or less than what the loan is to the finance company. As long as the bankrupt can afford to keep paying for the car and is not behind in payments, they will be able to keep their car. I have never seen the finance company take the vehicle away in those circumstances—not once in my three decades of doing insolvency work.” 

Beyond financed vehicles, every province provides an equity exemption for at least one motor vehicle. Saskatchewan leads the country at $10,000 in permitted equity, followed by Ontario at $8,578, and Nova Scotia at $6,500. Alberta and British Columbia each set the threshold at $5,000, while Manitoba allows $3,000 for general use. Prince Edward Island allows up to $6,500 if the vehicle is required for work—otherwise $3,000 is permitted. Newfoundland and Labrador permits $2,000. New Brunswick exempts one vehicle based on reasonable needs.

• Financed vehicles: If you owe more than the car is worth and payments are current, you can usually keep making payments and retain the vehicle.
• Leased vehicles: You don’t own a leased car—you have the right to use it. If lease payments are current, you can typically keep the vehicle regardless of its market value. If you can’t afford payments, you can surrender the vehicle and include any shortfall as unsecured debt in your bankruptcy.
• Behind on payments: A secured lender can repossess a financed or leased vehicle whether or not you file for bankruptcy. Filing stops most unsecured collection, but not a lender’s right to reclaim collateral when you’re in default.

Can you keep your household furniture and appliances?

Provincial exemptions protect your couch, bed, refrigerator, stove, and other basic furnishings. 

Ontario offers the highest protection at $17,091, while Saskatchewan exempts all necessary household furniture and appliances with no dollar cap. Quebec allows $7,000; Nova Scotia allows $5,000. Manitoba sets the limit at $4,500; and Alberta, British Columbia, and Newfoundland and Labrador each protect $4,000. Prince Edward Island provides a $5,000 exemption. New Brunswick exempts household furniture and appliances to the extent necessary to meet the reasonable needs of you and your dependants.

As for financed furniture, Kroll notes that secured creditors technically retain the right to repossess, but it almost never happens in practice: "If you've got furniture in your house that is financed and you're behind on the payments, that secured creditor can use their rights that you gave them to take that furniture away.” How often does it happen? “So seldom it happened maybe two or three times out of the thousands of cases I worked on,” says Kroll.

Is food and fuel protected in bankruptcy?

Several provinces explicitly protect enough food and fuel to sustain you and your dependants for a defined period. 

Alberta, Newfoundland and Labrador, and the Northwest Territories each protect a 12-month supply. Manitoba and Saskatchewan protect six months of food and fuel. New Brunswick covers three months. Nova Scotia and Ontario place no specific limit on necessary food. So, if you’re a prepper who stocks barrels of dried food, the law is on your side. That said, even if it wasn’t, it’s doubtful a trustee could actually cover their cost of seizing, warehousing and reselling buckets of dried food.

Can you keep your house if you go bankrupt in Canada?

This one surprises many people because they assume the house automatically goes to creditors. In reality, most provinces provide an exemption for a defined amount of equity in your principal residence, but the rules vary per province and a few have no exemptions at all.

Saskatchewan offers the highest protection at $50,000 per person per title (up to $100,000 for jointly-owned homes), followed by the Northwest Territories at $50,000 and Alberta at $40,000 (pro-rated if you co-own). British Columbia protects $12,000 in the Greater Vancouver and Victoria capital regions and $9,000 elsewhere. Newfoundland and Labrador allows $10,000, and Manitoba permits $2,500 for a sole owner or $1,500 for a co-owner. New Brunswick, Nova Scotia, Prince Edward Island, and Quebec do not provide a home equity exemption. If you have significant equity in your home, a consumer proposal may be a better option, since it allows you to reduce your unsecured debt while keeping your house.

In December 2025, Ontario updated its exemption amount, increasing it to $12,997 in equity. But unlike other provinces where you keep equity up to the exemption limit and only the excess goes to creditors, Ontario operates differently:

• If your net equity is $12,997 or less, your home is fully protected.
• If your net equity exceeds $12,997 by even one dollar, the entire equity amount is available to creditors—not just the portion above the limit.

Can you keep your pets in bankruptcy?

Don’t worry, they’ll let you keep Rex. In New Brunswick, domestic animals that belong to you are explicitly exempt from seizure. Saskatchewan protects pets up to a value of $2,000. In Newfoundland and Labrador, all pets are exempt. While most other provinces do not specifically list pets in their exemption statutes, the practical reality is that household pets have negligible resale value and trustees do not seize them.

Can you keep your RRSPs and other registered retirement savings?

Under the Bankruptcy and Insolvency Act, RRSPs, RRIFs, and RDSPs are also exempt from seizure in every province. However, contributions made within the 12 months immediately before filing are not protected and will be clawed back to pay creditors. This is a federal rule that applies in every province and territory. Funds that have been in your RRSP for longer than one year are safe.

Is your clothing exempt from bankruptcy?

Every province and territory exempts necessary clothing from seizure. 

British Columbia, Ontario, Manitoba, Nova Scotia, New Brunswick, Prince Edward Island, and Quebec all place no dollar limit on essential clothing for you and your dependants. Alberta and Newfoundland and Labrador each cap the exemption at $4,000, while Saskatchewan allows up to $7,500 including jewellery. In practical terms, no trustee is going to empty your closet.

Are medical and dental aids protected?

If you rely on a wheelchair, hearing aids, prosthetics, prescription glasses, or any other medical or dental device, those items are fully exempt in every province and territory across Canada. There is no dollar limit on this exemption anywhere in the country.

Can you keep tools of your trade?

The law recognises that you need to earn a living after bankruptcy. Ontario protects up to $17,362 in tools, equipment, and instruments used in your occupation ($37,820 if farming is your sole occupation). Alberta and British Columbia each exempt $10,000, while the Northwest Territories allows $12,000 ($15,000 for hunting, trapping, or fishing). Saskatchewan exempts all tools required for a debtor's work with no dollar cap. Manitoba and Nova Scotia each allow $7,500. Newfoundland and Labrador protects up to $10,000. New Brunswick exempts tools to the extent they are necessary to meet the reasonable needs of you and your dependants. Quebec exempts tools required for your occupation with no dollar cap. Prince Edward Island has the lowest fixed threshold at $2,000—but increases the allowance to $5,000 for farm machinery, livestock, and equipment.

What about farming and fishing equipment?

If your livelihood depends on farming, fishing, or aquaculture, Canadian bankruptcy exemptions provide significant additional protection.

In Alberta and Manitoba, up to 160 acres of farmland is exempt when your principal residence sits on the property, and all personal property needed for the next 12 months of operations is protected. Saskatchewan exempts all livestock, farm machinery, and one car or truck required for operations, plus two bushels of seed per acre. Newfoundland and Labrador protects up to $10,000 in personal property for farmers, fishers, and aquaculture operators. Ontario allows $37,820 in tools, livestock, and implements for those whose sole occupation is farming. 

Bankruptcy exemptions by province 

Dollar limits below reflect common exemption categories. Make sure to confirm current figures with an LIT, as provincial limits are updated periodically.

Exemptions apply to equity (value minus secured debt), not the full asset value.

Is a consumer proposal a better option?

If you own assets above your province’s exemption limits—like significant home equity, a vehicle worth more than the threshold, or non-exempt investments—a consumer proposal may let you keep everything while repaying a portion of your unsecured debt.

Unlike bankruptcy, a consumer proposal is a negotiated settlement: You make fixed monthly payments over up to five years, and your assets are generally not seized. Learn more about the differences between consumer proposals versus bankruptcy.