Briitish Columbia, BC Bankruptcy Exemptions

Equity is the excess that the value of an asset has over any charges or encumbrances against that asset.

For example, if you have a car worth $10,000 and there is a $6,000 secured debt against it then the equity in the car is $4,000. In BC the exemption for a car is $5,000 so in this example you are entitled to the equity of $4,000 and the unsecured creditors cannot take this.

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BC Bankruptcy Exemptions are:

• Equity in a home in Greater Vancouver and Victoria = $ 12,000.  In the rest of the province   = $ 9,000;
  
• Equity in Household items   = $ 4,000;
  
• Equity in a Vehicle    = $ 5,000;  The vehicle exemption drops to $2,000 if the debtor is behind on child care payments (to facilitate the enforcement of Maintenance Orders)
  
• Equity in work tools    = $ 10,000;
• Effective July 7, 2008 exemptions are in effect for all registered retirement savings plans (RRSP's, RRIF's and DPSP's (Deferred Profit Sharing Plans).
  • Contributions made in the 12 months prior to the date of bankruptcy will be recovered (clawed back) for the benefit of the bankruptcy estate for RRSPs in provinces without RRSP exemption laws (BC, Alberta, Ontario, NB, and NS);
  • There will be no upper cap on the amount of RRSPs that can be protected;
    
  • There will be no need to set up the RRSPs in a locked in plan to make them eligible for exemption;
  • The court will have no jurisdiction to extend the one year claw back period period in an appropriate case.

  
  

British Columbia Low Income Climate Action Tax Credit (BCLICATC) The Province of British Columbia has introduced a new tax credit for low-income earners under section 8.1 of the British Columbia Income Tax Act. This refundable credit will be issued in conjunction with GST refunds by the Canada Revenue Agency on behalf of the province. The first cheques are to be issued in early October 2008.

These cheques will be mailed to trustees in cases where recipients are bankrupt. The Office of the Superintendent of Bankruptcy (OSB) has been asked for its position regarding the nature of the BCLICATC amounts in a bankruptcy context.

It is the view of the OSB that this tax credit amount represents property under section 67(1)(c) or (d) of the Bankruptcy and Insolvency Act (BIA) that is divisible among the creditors. Please note that the treatment of the GST-related portion of these cheques has not changed, and remains as set out in section 67(1)(b.1) and Rule 59 of the BIA. Cheques that include amounts relating to both the GST and the BCLICATC will clearly identify the dollar amounts pertaining to each. Further information in English may be obtained at the following website: http://www.cra-arc.gc.ca/bnfts/fq_bclctc-eng.html