Bankruptcy, RRSP and RESP
Recent legislation has deemed RRSP’s to be exempt from seizure by the trustee. However, any contributions made in the 12 months prior to bankruptcy must be paid to the estate. You can work out with your trustee whether you would rather pay it from your income, or have the RRSP company send the funds directly.
RESP’s are not specified by the legislation as being exempt, so the trustee is required to either cash them out or make arrange payment arrangements with you if you want to keep them in place. Many people are under the impression that RESP’s are held in trust for their children. In fact, they do not meet the requirements for a legal trust, so are not protected from seizure in a bankruptcy context.
Contact Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.
