Alberta Bankruptcy What Will It Cost?

Posted by: Shawn Stack on 01/05/2012

From time to time we deal with Alberta residents who come to us seeking the protection of personal bankruptcy once their wages have been garnished or they have received notice of a pending lawsuit from one or more of their creditors.  In many cases, these people have done little research to learn what bankruptcy is all about and believe that it is something like a “free lunch.”  This is simply not true.  For some filers there are costs that go beyond court costs and the fees bankruptcy trustees charge.

The dollar cost of a bankruptcy filing depends on the financial situation of the filer.  The best advice we can give you is to pick up the phone and set up an appointment with a bankruptcy trustee to review your situation.  We offer free initial consultations where we can give you an estimate of what your bankruptcy filing will cost.

There are two factors that go into determining your dollar cost – what you own and how much you make.  Our federal bankruptcy laws as outlined in the Bankruptcy and Insolvency Act of Canada (BIA) recognize there are two sides to a bankruptcy.  The debtors who can no longer afford to pay what they owe – often through no fault of their own – and the creditors to whom they owe money. 

The fact some Albertans fail to realize is that the law says those who own more and can give more cannot walk away from what they owe without contributing something towards creditor repayment.  The law protects bankruptcy filers from contributing so much they are left with little or nothing.  The intent is to rehabilitate debtors not to punish them with undue economic hardship.

Each Province has exemption allowances for personal assets that ensure no bankruptcy filer loses all they own.  Alberta has some of the most generous allowances of any Province, including a $40,000 allowance for equity in a principal residence.  For all assets, if the total of what you own in each class exceeds the exemption allowance, you must surrender the asset to be sold with the proceeds going towards creditor repayment.

In addition, if your monthly income exceeds the government established living allowance for your family size by more than $200, you will have to contribute half of the excess to go towards repaying your creditors.

If you are in financial trouble and you want to know what an Alberta bankruptcy will cost you, schedule a consultation with a licensed bankruptcy trustee anywhere in Alberta.