Filing Bankruptcy In Alberta: What You Should Know
Bankruptcy in Alberta offers a fresh start if you’re overwhelmed by debt and have exhausted all other options. By filing for bankruptcy, you’ll be protected from creditor actions and wage garnishments while your financial situation is restructured. While the process does have a negative effect on your credit, bankruptcy clears most debts and lets you rebuild your finances so you can embark on a path to financial health.
But before you decide to file, it’s important to understand what bankruptcy in Alberta involves.
What Is Bankruptcy In Alberta?
Bankruptcy is a federally regulated process that’s designed to provide relief for individuals dealing with overwhelming consumer debt. In Alberta, filing for bankruptcy immediately protects you from creditor actions, like wage garnishments, lawsuits, or ongoing collection calls.
The majority of unsecured debts — such as credit card debts and payday loans — can be discharged through bankruptcy. However, not all debts can be eliminated through this process.
| What Is Not Covered Under Bankruptcy? Exclusions to bankruptcy include the following: – Mortgages – Home equity loans – Secured lines of credit – Secured personal loans – Car loans – Student loans from the federal government (if it’s been less than 7 years since leaving school) Legal fines |
Learn more: Bankruptcy
Who Can File For Bankruptcy In Alberta?
Not everyone qualifies to file for bankruptcy in Alberta. To be eligible, you must meet several requirements, including the following:
- Be a Canadian resident
- Have at least $1,000 in unsecured debt
- You owe more than your assets are worth
- Be unable to keep up with your debt payments as they come due
If these conditions are met, you may consider pursuing bankruptcy as a debt relief option.
The Bankruptcy Process In Alberta: What to Expect
If you’re thinking about filing for bankruptcy in Alberta, here’s a breakdown of how the process works:
1. Speak With A Licensed Insolvency Trustee (LIT)
Bankruptcy begins with a Licensed Insolvency Trustee in Alberta. The LIT manages your proceedings and ensures all rules are followed for both you and your creditors.
2. Financial Assessment
Your trustee will assess your finances to see if bankruptcy is the right solution for you. They’ll look at your assets, debts, and overall financial status to ensure that your debts exceed your assets and that you can’t keep up with your payments.
3. Document Filing
If bankruptcy is the recommended course, your trustee will prepare the necessary paperwork. You’ll need to provide your personal and financial details to finalize the following:
| Assignment Of Assets | Allows your trustee to sell select assets for creditor repayment. |
| Statement Of Affairs | Outlines your entire financial position. |
Your LIT will then register your bankruptcy with the Office of the Superintendent of Bankruptcy (OSB). Once filed, your creditors are officially notified.
4. Legal Protection (Stay Of Proceedings)
Filing for bankruptcy activates a court order that stops all collection activity, including phone calls, lawsuits, and wage garnishments. This is known as a stay of proceedings.
5. Meet Bankruptcy Duties
To be discharged from bankruptcy, you’ll be required to do the following:
- Surrender non-exempt assets
- Attend two mandatory financial counselling sessions
- Submit monthly reports on your income and expenses
- Make monthly payments, with possible surplus income payments if your earnings exceed a set amount
5. Discharge
If this is your first bankruptcy and you meet all obligations, you can be discharged after 9 months. If surplus income applies, that timeline increases to 21 months. Once your bankruptcy is discharged, your eligible debts are eliminated, and you’re now free to start rebuilding your financial life.
Where Can I File For Bankruptcy Application In Alberta?
As mentioned, bankruptcy is a legal process that’s filed with a Licensed Insolvency Trustee. Here are a few trustees you can use to file for bankruptcy in Alberta:
| BDO Canada | — 903 8th Avenue Southwest, Suite 620, Calgary, AB T2P 0P7 — 910130-103 St, Suite 900, Edmonton, AB T5J 3N9 | Learn More |
| Consolidated Credit | — 144-4th Ave. SW, Suite 1600, Calgary, AB — 10180, 101 St. North West, Suite 3400, Edmonton, AB | Learn More |
| 4 Pillars | — Suite 1800 – 330 5th Ave SW, Calgary, AB T2P 0J4 — 207, 9411A 20th Ave NW, Edmonton, AB T6N 1E5 | Learn More |
Can I File For Bankruptcy Online In Alberta?
You can interact with your LIT remotely and submit bankruptcy-related documents digitally. But you can’t file for bankruptcy online on your own. You’ll need to go through an LIT to file.
That said, you can interact with your LIT remotely and submit bankruptcy-related documents digitally. Electronic signatures may also be permitted.
| Tip: Work With An Expert Given the complexities of bankruptcy filings, it’s strongly advised to work with a lawyer or LIT. They’ll help clarify all your options and ensure that every step is properly completed. For those concerned about legal costs, there are legal firms that provide pro bono services, which means they’ll provide free legal advice for eligible individuals. |
What Does It Cost to File For Bankruptcy In Alberta?
The process of bankruptcy isn’t free for most people, and the costs will depend on a few factors, including your income, the size of your household, and your assets, among others.
In Canada, filing for bankruptcy costs a minimum of $1,800, which can be paid upfront or in $200 monthly installments over 9 months. This covers administrative, government, and LIT fees.
To get a true understanding of how much it will cost you to file for bankruptcy in Alberta, you will need to speak with a trustee.
Learn more: How Much Does It Cost To File For Bankruptcy In Canada?
| How Does Surplus Income Affect The Cost Of Bankruptcy? Surplus income significantly affects the overall cost of bankruptcy. If your monthly income surpasses a certain threshold, you’ll need to make additional payments called surplus income payments. The higher your income over this limit, the higher these payments will be, which will increase the total cost of your bankruptcy. |
Bankruptcy Laws In Alberta
The following provincial laws apply to bankruptcy in Alberta:
- Alberta Limitations Act: This legislation sets a time limit (typically two years) during which a collection agency can legally seek repayment. Once that period ends, you may be protected from further legal action for the debt.
- Alberta Personal Property Security Act: This legislation requires creditors to record any claims on assets used as collateral. Before those assets are sold, your trustee will check the PPSA registry to confirm that there aren’t any unresolved creditor interests.
- Alberta Civil Enforcement Act: This Act establishes what assets are protected against creditor liquidation to satisfy unpaid debt.
Are You At Risk Of Losing Your Home?
Bankruptcy often brings fears of losing everything, including your house or your vehicle. While it does involve giving up certain assets, some assets may be exempt. In Alberta, the following assets are exempt from seizure:
- Up to $40,000 in equity from your primary residence.
- Up to $5,000 in personal vehicle equity.
- Up to $4,000 in household furniture and personal items.
- Up to $10,000 in tools required for your profession.
- Up to $4,000 in clothing.
- 12-month supply of food to sustain your household for one year.
- All necessary medical equipment
Learn more: Will I Lose My House If I File For Bankruptcy In Canada?
How Does Bankruptcy Impact Your Credit In Alberta?
Filing for bankruptcy in Alberta will negatively affect your credit score. Credit bureaus are notified once the process begins, and a record of the bankruptcy is added to your credit report.
For a first-time bankruptcy, this note typically remains on your report for 6 to 7 years after discharge. For a second bankruptcy filing, it can stay for up to 14 years.
During this period, you’ll have a difficult time securing new credit. Even if a lender does approve your application, it will likely come with a much higher interest rate and a lower loan amount due to the increased risk.
Bottom Line
Filing for bankruptcy in Alberta can offer you a fresh financial start if you’re drowning in debt and can’t keep up with payments. However, while the process can provide relief from most unsecured debts, it’s important to understand the long-term impact on your credit health and how your assets may be dealt with. Consulting with a Licensed Insolvency Trustee can help you explore your options and make an informed decision about whether bankruptcy is right for you.
