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Bankruptcy

Ontario Protects Home Equity From Creditor Actions

Kitchener - Effective December 1, 2015, Ontario will increase thresholds for items that are protected from actions taken by a person's creditors, even when they file for bankruptcy. Changes to the Execution Act will also see the addition of a new exemption for home equity up to a maximum of $10,000.

The Ontario Execution Act defines the exemption of goods from seizure by creditors. It applies to creditors who have successfully sued a debtor and received a Writ of Seizure or Execution, and overrides the Bankruptcy & Insolvency Act. "The purpose behind the Act is to ensure that a debtor is not deprived of the necessities of life" said Ted Michalos, a bankruptcy trustee with Hoyes, Michalos & Associates Inc. "Ontario law has always exempted certain assets, within limits, including a motor vehicle, personal possessions and tools needed to earn a living, however, the dollar limits have not been increased since 2005."

The addition of an exemption for a specified amount of home equity brings Ontario legislation in line with other provinces including British Columbia, Alberta, Saskatchewan, Manitoba, Quebec and Newfoundland & Labrador. "The fear of losing one's home is one of the greatest concerns faced by individuals facing financial problems today" said Douglas Hoyes, a bankruptcy trustee with Hoyes, Michalos & Associates Inc. "While options like a consumer proposal can help families retain their home, this exemption will make bankruptcy or a consumer proposal less costly for many insolvent homeowners across Ontario."

The new limits under the Execution Act include:

Necessary clothing - unlimited
Household furnishings and appliances - $13,150
Motor vehicle - $6,600
Tools of the trade - $11,300
Livestock, tools for farmers - $29,100
Principal residence - $10,000 (new)

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