There are three basic types of assets in bankruptcy: Exempt, Non-Exempt, and Secured.
Exempt Assets in Bankruptcy
If an asset is exempt from seizure, you won’t lose it if you file for bankruptcy. The rules that define what assets are exempt are provincial rules, so each province has slightly different exemption limits. However, in most provinces you are permitted to keep your basic household furnishings, clothing, and other household items.
In simple terms, you typically would be able to keep the bed you sleep in each night, unless it happens to be a 200 year old antique bed worth tens of thousands of dollars. In virtually all cases your basic household furnishings and possessions will be exempt from seizure.
Non-exempt Assets in Bankruptcy
Non-exempt assets would be any assets that are specifically defined as non-exempt in bankruptcy legislation.
For example, all contributions you have made to your RRSP in the twelve months prior to the date of bankruptcy are non-exempt from seizure by your trustee. If you file bankruptcy in Canada, you lose any contributions to your RRSP in the last twelve months. Those contributions are not exempt. Any contributions you made more than twelve months ago are exempt from seizure; you are permitted to keep RRSP contributions made before the last year. They will not be seized by your trustee.
(The government does not want you to go an borrow a lot of money and put it in your RRSP just before you declare bankruptcy, so any contributions in the last twelve months are non-exempt).
The final category of assets are secured assets. A common example would be a car, with a car loan. If you have a car worth $10,000, but you have a loan for $10,000 with the car as collateral, the car will not be seized by your trustee. If the trustee did seize your car and sell it the proceeds would go to the the secured creditor, so there is no point in the trustee seizing your car. As long as you continue to make your loan payments, you can keep the car if you declare bankruptcy.
The rules in this area are complex, and vary from province to province, so we strongly suggest that you arrange a no charge consultation with a licensed bankruptcy trustee to review all of your assets, so that they can advise you whether or not you will lose your assets if you declare bankruptcy.