The biggest drawback to bankruptcy, and the reason why people generally want to avoid filing for bankruptcy at all costs, is that there is a risk that you ​​​​could be forced to sell your home.   Equity is worked out to by taking the market value of your home, minus the cost of your remaining mortgage, taxes, and other closing costs. In many provinces including Ontario, the exemption limit on the equity on your home is around $10, 000 — so if the equity in your home is less than $10,000, you can keep your house and your trustee will work with you on continuing your mortgage payments.   However, if you have over your province’s exemption limit in equity, you may have to find a way to pay back the surplus equity or forfeit your home.   “Get the right advice about what level of equity in your home will be considered for bankruptcy filing,” says Awram. “It may be added to your asset list if it's over a certain threshold, perhaps making the consumper proposal a better choice.”  Another drawback is that people who are in bankruptcy are also subject to strict income guidelines, with any “surplus income” going to creditors for up to two years.  You may also be forced to relinquish your registered accounts. Your TFSA contributions will not be protected from bankruptcy, nor will RRSP contributions made in the previous 12 months. Each province has its own guidelines regarding RRSP savings.   Lastly, declaring bankruptcy has its own price: The minimum cost to declare bankruptcy in Canada is typically around $1,800 to cover the trustee’s administration fees and time.