One of the issues that has concerned PLAN families and the leadership at Plan Institute for years is the lack of creditor protection for the Registered Disability Savings Plan (RDSP). It’s a sad but realistic fact that on occasion a person with a disability might face bankruptcy. And while we would like to hope that a creditor might show compassion, in reality that’s very likely.
Attached is a recent case in which the appointed bankruptcy trustee tried to pursue the bankrupt’s debt by attempting to fold the RDSP that was being held by the Royal Bank as a way to recover the debt owed. It was only with the intervention of the Supreme Court and a Justice, as well as the bank themselves who understood the ramifications of allowing the Trustee to access the RDSP, that prevented it from being used to settle the debts. We strongly encourage you to read the attached case as it clearly lays out the serious consequences related to the RDSP not having creditor protection, which is a province-by-province process to enforce.
How can we change this in BC and lead the way for every other province to do the same in a timely manner?
While this example is specifically related to one Bankruptcy Trustee, in our opinion we think other financial institutions might act the same way – while none of our banks are set up to address every set of individual circumstances, this one time the RDSP was protected but only after going to the Supreme Court. While we would like to hope that compassion and understanding would prevail in every case, we believe that it would likely not.
To further put things into perspective, Registered Retirement Savings Plans (RRSPs) are protected. So why do our most vulnerable citizens have less protection than every other Canadian with an RRSP? This is simply not right and it is a problem that we actually have the ability to fix.