Furniture Exemption and What It Means to the Canada Bankruptcy Filer

Posted by: Shawn Stack on 01/26/2012

Filing for bankruptcy may be overwhelming for people who think that they will lose everything they own – however, furniture exemption and other asset exemptions for those declaring bankruptcy exist to eliminate the possibility of that scenario. Here are a few things you should know about furniture exemption for better preparation for bankruptcy proceedings and the aftermath of a declaration:

What Exemptions Are

Exemptions, as the name implies, involve assets that may not be taken away by the courts and sold to pay off the filer’s debts in bankruptcy. Exemptions of assets and items may be allowed to a certain extent, as long as the monetary value of these do not go beyond a set limit. In most provinces, these are the exemptions that filers should be aware of, in addition to furniture exemptions:

• Clothing
• Food
• Cars and other vehicles
• The filer’s home
• Equipment used in the filer’s occupation

The basis behind these exemptions is the fact that the filer will be better able to return his finances to a stable state if he or she has these “essentials.” As such, these exemptions may not apply to luxury items the filer owns. For instance, expensive and high-tech consumer electronics might be liquidated by the courts to pay off valid debts.

Exemption Limits

The limits for the exemption for assets and other items are regulated by legislation specific to the filer’s province or territory of residence, with values for each exemption possibly varying from place to place. Certified bankruptcy trustees licensed to practice in your area are one good resource for information on exemption limits, as is your local government office.

Valuation of Furniture and Other Assets

Calculating how much your assets are worth can help you establish a more accurate view of your assets and finances, and help you boost your chances at making a more effective action plan to regain your lost assets and finances after bankruptcy. Valuation of assets, needless to say, is important. Start by making a list of all items and their corresponding current values. Find out what the limits are in your province or territory so you have a better idea of what you may retain and what may have to be turned over in bankruptcy court. Remember that equity value, and not just actual value, applies – equity value is the amount “left over” after payments are made to creditors.
There are limits as to what may be turned over to the courts for liquidation and debt payment; limits set by furniture exemption regulations and other exemptions that may help the bankrupt individual regain his financial footing and get back on the road to stable fiscal health.