• Thu. May 23rd, 2024

Impact of Bankruptcy on Financial Saving & Insurance Policies

Impact of Bankruptcy

When a period of financial difficulty occurs, especially the bankruptcy, what happens to the financial products? There are a multitude of financial products allowing the people to insure themselves and save.

Some people will delay seeing an insolvency practitioner when debt becomes uncomfortable because of the fear associated with the potential loss of the portfolio of financial products they have built up over the years.

Event of Bankruptcy & Financial Saving and Insurance

The insolvent person wants to avoid having their retirement savings seized, to cite just one example. There are many of these financial products that remain elusive in the event that a person is forced to declare bankruptcy. Here are some examples of what might or might not be enterable. We “rkillen and associates” and associates are sure about it that after reading this post, you will be able to understand bankruptcy much better.


The Registered Retirement Savings Plan is a well-known “accumulation” financial product for saving for the future. The proceeds of the savings will allow those who have contributed to obtain supplementary income complementary to the public plan during retirement. The RRSP is an elusive type of savings except for contributions made in the 12 months preceding the filing of bankruptcy.

It should be noted that the “disbursement” vehicles associated with the RRSP or a former pension plan (eg LIRA, RRIF LIF, etc.) are also exempt from seizure.

My Workplace Pension Plan

There are many pension plans that can be offered by the employer. Here are some examples:

  • Defined Benefit Pension Plan (DBRP)
  • Defined Contribution Pension Plan (DCPP)
  • Registered Pension Plan (RPA)
  • Simplified pension plan (RRS)
  • Deferred Profit Sharing Plan (DPSP)
  • Voluntary retirement savings plan (VRSP)

It appears that these schemes are elusive. However, it should not be taken for granted that this is always the case. For example, some publicly traded employers offer their employees a company stock purchase plan. It should be noted that this type of benefit, very often complementary to a pension plan already in place, is seizable.


The tax-free savings account is a seizable savings product, regardless of the type of investment vehicle it was invested in (eg mutual funds, segregated funds, guaranteed investment account, etc.)


The Registered Education Savings Plan is a plan to save the estimated costs related to a child’s education. The RESP is seizable with the exception of the Canada Education Savings Grant (CESG) and the Quebec Education Savings Incentive (IQEE). There are, however, a few peculiarities to take into account. It must be determined whether there is a single or multiple contracting parties. When there is more than one contracting party to the plan, one of whom is insolvent and the other not, the plan may only be seizable in part.


The Registered Disability Savings Plan allows eligible persons with disabilities to contribute to a savings plan along with a government contribution of up to double the individual contribution. However, the individual contribution is not protected from creditors and the savings made by the contributor are seizable . However, the government contribution is not.

My Savings Account

The traditional savings account is seizable

My Life Insurance

There are several types of life insurance policies, including whole life insurance and universal life insurance. These types of contracts make it possible to accumulate a so-called “surrender” value set by the insurer according to the year of issue of the life insurance contract and/or allow the contracting party to save from his insurance policy. The beneficiary at death who has been named to the life insurance contract will determine whether the cash surrender value or savings is seizable or not.

My Disability Insurance and/or my Critical illness Insurance

These types of life protection are increasing in popularity. Only the living premium refund is seizable if it is available at the time of filing a proceeding, such as bankruptcy. Indeed, several insurance companies offer the premium refund rider to the insurance contract if no claim has been made before the end of a period prescribed in the contract.

There are a multitude of financial products on the market for both savings and insurance. The Richard Killen and Associates is able to help you assess the risk of seizure for each of your financial products and find a solution to your debt adapted to your financial situation. Keep visiting us to learn more about such key financial terms and their impact on business.

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