0010 - Debt Related Queston: Bankruptcy Question # 0010

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QUESTION #0010:

My friend went bankrupt but she is still driving her car and gets to keep her house and furnishings– how can that be?



ANSWER:

If you have to declare bankruptcy or even if you are just sued by a creditor, you are allowed to keep basic personal assets. The assets that are exempt from seizure (either in a bankruptcy, or by a creditor’s garnishment) are governed by the BC Court Order Enforcement Act and includes: $5,000 equity in a vehicle, $4,000 worth of home furnishings, $10,000 tools of the trade and $12,000 equity in a residence (reduced to $9,000 outside the CRD area). Equity means the value of the asset above any secured loans like a mortgage or car loan. So, your friend may get to keep her car and house if the equity in each item is less than the exempt amount. Even if the equity in her house or car is above the exemption, she may be buying the non-exempt portion back over time from the trustee.