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collecting on a pledged RRSP
September 10, 2015
5:43 pm
speedybeedy
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September 10, 2015
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Im a second mortgage lender that previously took on a loan with a pledged RRSP as collateral, It is a legal document that was written up between two lawyers and the debtor agreed on all terms.
I am now in the middle of trying to collect on the debt as its gone bad.
The bailiff has already served there financial institution and we are awaiting a reply.
Its been 3 week now and we are still waiting on the banks legal firm to contact us with there outcome.
I am assuming we are going to have to attain a court order to complete this, and maybe a legal battle with the debtors.

Has anyone ever had any experience with this, I know it is not very common but it would nice to hear any others experiences in this matter if there is any out there.

Thank you

September 12, 2015
9:03 am
Yatti420
Canada
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Most of us are individuals and not businesses but if it's legal and you have all paperwork I think it would be almost certain that you'll be able to collect the RRSP eventually.. If the bank doesn't reply go get a court order.. They have to reply to that..

September 12, 2015
10:23 am
kanaka
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December 23, 2011
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RRSP and RRIF have creditor protection. TFSA does not. I realize the RRSP was written into the contract but you may possibly be in an odd situation.

Keep us posted with your results.

PS. Depending on the amount it will be interesting to see how the 10-30% tax withhold will be handled.

September 12, 2015
12:19 pm
Norman1
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RRSP/RRIF creditor protection is conditional.

According to the article Advisor.ca: Protecting RRSPs from creditors, it depends on the legislation providing the protection. For those who live in a province without overriding provincial legislation, RRSP/RRIF creditor protection comes from the federal Bankruptcy and Insolvency Act that was amended around 2008 to provide some protection.

The article points out that, under the federal act, protection only kicks in after a debtor formally files for bankruptcy. Otherwise, creditors can seize RRSP's and RRIF's.

Even after filing for bankruptcy, the bankruptcy trustee can still seize any assets transferred into an RRSP within 12 months of the filing. The trustee can also seize assets transferred in the last 5 years if the debtor was insolvent at the time of those transfers.

Ontario does not have overriding provincial legislation, according to Is My RRSP Creditor Proof? (April 30, 2014) from National Bank Financial. So, these limitations apply to RRSP and RRIF assets of those who reside in Ontario.

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