Back In 2008 the Canadian Government made changes to the Federal Bankruptcy and Insolvency Act to make RRSPs are creditor proof, but with a few provisions. It is important to note that the protection from creditors is available only if you are entering formal bankruptcy proceedings. The law does not protect RRSPs outside of a bankruptcy context. If a person is suffering financial difficulties and they do not wish to declare bankruptcy they do not benefit from this law and may have their RRSP assets seized by creditors.
As well, creditors may still seize any funds contributed to the RRSP in the past 12 months preceding the date of bankruptcy. A bankruptcy trustee can also seize an RRSP plan in bankruptcy within 5 years of a transfer to the plan, if the client was insolvent at the time of the transfer. So in other words if you are already behind in your debts, if your liabilities already exceed your assets and if the creditors have already been knocking on your door then you cannot protect your money by simply “shoveling” your assets over into an RRSP plan. This law does truly protect the regular, solvent person who has contributed to an RRSP over the years and now due to unforeseen circumstances suddenly faces bankruptcy. At the end of the day they will have their RRSP accounts intact.
In addition to the federal protection some of the provinces have also enacted legislation in various forms to offer bankruptcy protection for RRSPs.
Finally though, there is one creditor against which there is no protection even if bankruptcy is declared. Canada Revenue Agency is still entitled to seize assets if there are taxes owing.