Question: hi, I have a managed rrsp to which I have contributed for 20 years. I have a legal judgement against me and am appealing it, but if I lose and I may go bankrupt. Can I protect the RRSP now by making it into an insurance. Thanks
Answer: That is a difficult question. If you file for personal bankruptcy in Ontario you are required to disclose any assets you disposed of in the prior year (and in some cases in the past five years). Therefore if you converted your RRSP to a creditor-protected RRSP, and then went bankrupt, it is possible that your creditors or your trustee would attack the transaction. They probably cannot seize the RRSP, but they may extend your bankruptcy and require you to repay some or all of the value of the RRSP as a condition of your discharge.
There are many other factors to consider, including the value of the RRSP, and whether or not a consumer proposal was a viable option, so we suggest you contact a bankruptcy lawyer, or a bankruptcy trustee, to review your options in detail before deciding on whether or not to attempt to convert the RRSP.