It has long been known that Quebec is somewhat different that the rest of the Canadian Federation, but how does this difference impact a bankruptcy proceeding?
At first it is very important to remember that Quebec works within the Civil Law tradition, whereas the rest of Canada falls under the Common Law. To oversimplify, the majority of bankruptcy issues are dealt with by the Quebec Civil Code and Civil Code of Procedure.
What this means to a person or company filing a bankruptcy in Quebec is that rules regarding property, procedure and certain administrative tasks are slightly different.
In Quebec, personal property (including personal effects, home necessities and like) is not counted as an asset of the bankruptcy until it reaches a total sellable value of $6,500. This is the amount that the Civil Laws of Quebec have exempted, meaning allowed an individual who has filed bankruptcy to keep.
Unfortunately in Quebec there is no clear and automatic protection in the law for cars or equity in a home, or even tools of the trade as may exist in other provinces. For anything to be exempted from being an asset of the bankruptcy, it requires prior approval of the courts to make such a declaration. The Trustee still maintains the right and obligation to value the assets in the bankruptcy, however, they do not have a right to declare specific assets exempt.
As well, the laws in Quebec specifically exempt the cash value or loans available against a life insurance policy or RRSP held with an insurance company as long as the beneficiary of the policy is designated to be a direct ascendant (parent), descendant (child) or spouse of the bankrupt.
Another difference about Quebec related to taxes: When filing your personal income taxes, your tax refunds for any years before as well as the year of the bankruptcy may be considered an asset of the bankruptcy. In Quebec, your provincial tax refund is not considered an asset of the bankruptcy. As well, any solidarity tax credits (Quebec’s version of GST refunds) are completely unaffected by the bankruptcy.
To know more about how a bankruptcy may be different in the province you live in, the best source of information is to talk to a local Trustee in bankruptcy.