Protecting Your Assets the Right Way

A creditor bearing down on you, or an impending bankruptcy, brings many concerns and unknowns. You may have a family farm, a collectible such as an antique car or other assets that you wish to protect from your creditors. In order to save those assets, you may think it is prudent to transfer those assets to a spouse, family member or close family friend. However, these types of approaches are not as straightforward as they sound and can come with pitfalls where the transfer is not properly completed.

Before attempting to protect your assets, a few helpful tips should be remembered.

Transfer The Asset for Fair Market Value

This is the most important rule to remember. If you have a quarter section of land or an antique car, you cannot simply gift it away to a family member before assigning into bankruptcy. All transfers when you are, or are about to be, insolvent will be subject to scrutiny. The Fraudulent Preferences Act requires that all transfers to a non-arm’s length party (think someone you know better than an acquaintance) require the transfer to be for fair market value.

In order to do so, it is generally advisable to obtain a valuation from an arm’s length third party, such as an auctioneer. Having these objective benchmarks will allow you to show to your creditors, and the Court if necessary, that the transfer was within reason.

However, just because you have transferred the asset for fair market value does not mean you are out of the woods. The cash you receive for those assets needs to be accounted for, as your creditors may be entitled to a share of those funds as well. If you are planning a transfer, you should consult with your legal advisors as to if those funds should be held in a segregated trust account, paid directly to creditors or otherwise.

Among other things, you will want to make sure you account for your secured creditors who may have a security interest in the asset you have sold.

The Asset May be Exempt

Just as important to consider is the fact that the transfer may be unnecessary. There are various pieces of legislation that provide bankrupt parties with exemptions, meaning certain assets cannot be seized. This is especially true for farmers, who, provided they have a plan to continue actively farming, may be able to retain many of their farming assets.

It may be that the transfer is unnecessary, and you are not only incurring extra work and expense, but you are also raising the suspicions of your creditors. A careful evaluation of whether or not the asset is even capable of seizure should be done before you begin to decide where and how to transfer it.


Of course, before any transfer of this nature is undertaken, you should consult with both your legal professional and/or your insolvency professional to ensure you are acting in accordance with the law. Transfers prior to an insolvency will raise red flags for any creditor, so you will make sure the reward outweighs the risks and difficulties you will face.

Should you have questions, please contact Robertson Stromberg today to begin the process.

Contact a Lawyer on this subject.

Travis K. Kusch

Direct: (306) 933-1373
Main: (306) 652-7575
Fax: (306) 652-2445
Email: [email protected]


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Protecting Your Assets the Right Way

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The Deadbeat Debtor – Is it Worth it?

All too often, creditors are forced to face the realization that their debtor cannot, or simply will not, pay. Whether it be because of a tenant, purchase of goods or contractor, the creditor is faced with very few avenues to recover the debt. The creditor is forced to consider taking ten cents on the dollar and drawn-out payment plan or bringing a formal court action.

While suing a defaulting debtor can lead to a relatively quick judgment as some defaulting debtors simply do not defend, the creditor then faces the realization that the judgment they have obtained is not worth the payment it is written on. The creditor has spent time and money, including legal fees, to obtain a judgment that they will never collect on. To avoid this pitfall, there are ways for creditors to attempt to act quickly to ensure they obtain some form of payment.

First, focussing specially on the commercial landlord, landlords can attempt to distrain on their tenant’s property. In doing so, the landlord must act quickly as one can only distrain on property that remains on the leased property. The landlord must also avoid the common pitfall of terminating the lease and then attempting to distrain, as once a lease is terminated, the landlord’s right to distrain goes by the wayside.

Creditors may also attempt to register a lien in order to protect their interests. While the most well know lien is the builders’ lien, there are other lesser-known processes provided for in The Woodmens’ Lien Act, The Commercial Liens Act and The Threshers’ Lien Act. Any creditor who may have lien rights should act quickly to ensure the funds that are being held back under the lien legislation are not disbursed.

If you are one of those unfortunate creditors who cannot utilize a lien to enforce the debt, and do not have a security interest in the debtor’s property, you may be forced to consider whether pursuing the debt is worth while. If the debtor is unwilling to agree to a payment plan or other resolution, you will be forced to gamble on whether you can enforce your judgment through The Enforcement of Money Judgments Act. In making that decision, there are a few considerations worth noting:

  1. Does the debtor have land and if so, how many mortgages or judgments are registered against it? It is important to note that pursuant to the Bankruptcy and Insolvency Act and The Saskatchewan Farm Security Act, the debtor is entitled to certain exemptions for their homestead or home-quarter, as the case may be.
  2. Does the debtor own any vehicles and if so, more than one?
  3. Have you run a judgment search? If there are several judgments already registered against a debtor, the chances of you collecting are reduced as there are more people claiming a piece of the pie.
  4. If the debtor is a corporation, are they up to date on their taxes and payroll remittances? CRA holds a super priority interest on a debtor’s asset for unpaid remittances. Furthermore, the failure to remit to CRA is usually a strong indicator of financial health, or lack thereof.

In short, it is usually helpful to determine ahead of time if there is any meaningful chance of enforcing your judgment. This will help you save time, money and frustration in chasing a dead beat debtor who will not, and probably cannot, pay.

Contacting a Lawyer on this Subject

Should you require more information on how to efficiently and cost-effectively recover against your debtors, please contact Travis K. Kusch at (306) 933-1373

Whether it’s personal or business, we handle cases ranging from wills to overseeing complex business deals, and everything in between. Our success comes as a result of our collective effort. Combining the experience of your lawyer together with the resources of our team, you can put your trust in us to handle your case with confidence.

Area of ExpertiseDebt Collection