In July, 2008, the Canadian Bankruptcy and Insolvency Act changed so that most Registered Retirement Savings Plans (RRSPs) purchased prior to a year before filing for bankruptcy are protected from seizure. This new ruling replaced some rather confusing regulations as to which types of RRSPs were exempt, along with inequities for the self-employed. The government’s position in passing this amendment is that RRSP contributions are designed to prevent future insolvency when a citizen retires from the workforce. Hence, seizing RRSP assets during bankruptcy will contribute to future poverty and debt problems.
If a review of an RRSP in the year before bankruptcy indicates that it has been purchased with an eye to protecting assets from creditors, the Court may decide that the RRSP was bought in bad faith and seize it for liquidation and payment to your creditors.
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