Alberta Bankruptcy Exemptions – What can I keep?

Category: Personal Bankruptcy

One of the biggest misconceptions about filing for bankruptcy in Alberta, or anywhere in Canada, is that you will lose everything you own.  This just isn’t the case. Like in all provinces in Canada, there are Alberta bankruptcy exemptions for what are generally considered necessities of life.  In fact, in most instances people who file for bankruptcy are able to keep almost everything they own.  One of the main purposes of the bankruptcy process is to give people who are overwhelmed by debt an opportunity for a fresh start. It is not meant to make them destitute.  With this in mind, each province has developed a set of “bankruptcy exemptions,” or property that is protected when you file a bankruptcy. This allows you to make a new start with sufficient assets for you to lead a normal life.

Alberta Bankruptcy Exempt Assets

Most Alberta bankruptcy exemptions that are permitted by law are set out by the Civil Enforcement Act of Alberta.  This piece of legislation provides you the ability to protect the following assets:

  • Food required by you and your dependents during the next 12 months.
  • Clothing up to a value of $4, 000.
  • Household furnishings and appliances to a value of $4, 000.
  • One motor vehicle not exceeding a value of $5,000  of equity (equity is the value of the vehicle less any loans against the vehicle).
  • All Medical and dental aids required by you and your dependents.
  • Equity in your principal residence (including a mobile home) up to a maximum of $40,000 per household divided by your share of ownership (as calculating the allowable amount of equity in a residence can be tricky I recommend you contact a local trustee to discuss the details).
  • Tools of the trade up to a value of $10,000.  This category is used to capture any property that is required for you to earn income (i.e., tools, equipment etc.)
  • Registered Retirement Savings Plans (RRSP’s), Registered Retirement Income Funds (RRIF’s), Registered Disability Savings Plans (RDSP) and other similar registered investments.

As you can see you do not lose everything when you file for bankruptcy in Alberta.  In fact it is quite the opposite as there is a wide variety of property that you are able to protect.  Should you have any questions about how these exemptions relate to your situation, the best thing for you to do is to schedule a time to review your assets with a licensed Alberta Bankruptcy Trustee.  They will be able to advise you what assets you can keep should you file for bankruptcy.