One of the few “creditor-proofing” steps that actually works involves that old-fashioned investment your parents and accountant have been recommending for decades: RRSPs. Under changes to the law which came into force in July, 2008, money invested in RRSPs is exempt from creditors.

First, the old law. Generally-speaking, RRSPs were not exempt, but instead could be attached and liquidated by creditors. Whatever other special status RRSPs enjoyed, which were primarily tax-related, they were not special when it came to availability to creditors. This is all now changed as a result of amendments to the federal Bankruptcy and Insolvency Act and to the provincial Court Order Enforcement Act. These laws now specifically provide that RRSPs are not available to creditors, but remain the property of the debtor.

There is one exception. Amounts contributed in the previous year are not protected from creditors.

The exemption actually applies to more than RRSPs: RRIFs (registered retirement income funds), and DPSPs (deferred profit sharing plans) are also included.

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