News Flash January 13, 2012 – BC Bankruptcy Exemptions Reinstated.
It was reported in our blog of March 27, 2011 that a court decision on November 17, 2010 Thow (Re) (Exemptions from Seizure), 2010 BCSC 1561 turned the bankruptcy exemptions in BC upside down.
Although this decision related to a bankrupt that cannot be described as honest or unfortunate; it affected all those individuals that are honest and unfortunate, and simply looking for a fresh financial start.
The Court found, on a very strict interpretation of the applicable legislation, that the exemptions set out in the Court Order Enforcement Act of British Colombia, only apply if the value of the asset does not exceed the exempt amount. That is: if the value of your home, or car, is greater than the exempt amount (ie: $12,000, or $5,000), you are not entitled to any exemption in a bankruptcy.
Although there are many vehicles worth less than $5,000, I have not been able to find any homes in B.C. worth less than that.
What did all this mean?
If you made an assignment in bankruptcy in B.C., you would lose the right to retain up to $34,000 in equity. This was a significant issue and would affect many honest unfortunate people in financial difficulty trying to get a fresh start.
I am happy to report that that decision of November 17, 2010 has this day January 13, 2011 been overturned in the Atwal appeal.
This means that the exemptions are back the way they were before the decision in Re: Thow as follows:
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;
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.
Equity in essential clothing and medical aids is unlimited