Declaring Bankruptcy in Red Deer Provincial Law and Your Assets

Posted by: Sandy Lyons on 06/16/2011

If you are in financial trouble that is getting worse instead of better, do you know how declaring bankruptcy in Red Deer could help you?  Unfortunately, the fear of bankruptcy runs so deep in most residents all across Canada that few take the time to learn what they need to know until they have run out of options.

We see people in our offices from time to time who upon learning they are not going to lose their home in bankruptcy tell us they wish they had come in to see us sooner.  What often has happened is they hear that a friend or relative in a neighboring province lost their home when declaring bankruptcy in Red Deer, so they assume it will happen to them as well.

The fact is declaring bankruptcy in Red Deer is not the same as declaring bankruptcy in Toronto or Montreal or Vancouver.  While we have a federal law – the Bankruptcy and Insolvency Act of Canada (BIA) – that sets out the guidelines for bankruptcy protection, it is up to each Province to determine the specifics of implementing some of those guidelines in their location.

 The area where Provincial law has the biggest impact is asset exposure.  Depending on your circumstances and where you live, you may actually get to keep all you own in a bankruptcy filing.  We also get people on occasion who have a relative or friend who lost nothing, and are shocked to learn they are in a different financial position and will lose some of what they own.

The BIA recognizes there are two sides in a bankruptcy filing – the debtor and the creditors – and tries to be fair to both.  Honest debtors can walk away from their unsecured debt in exchange for surrendering assets they do not need to live a life without undue hardship to go towards repaying creditors.

The federal law guarantees no citizen anywhere in Canada will lose all they own in a declaration or personal bankruptcy.  The determination of what constitutes undue hardship is left to the discretion of Provincial law.

 Here in Alberta we have some of the most generous exemption allowances of any province in Canada.  While filers with vacation homes can expect to lose them in a bankruptcy filing, residents of Red Deer will be glad to know there is a $40,000 exemption allowance for equity in your principal residence.  In short, if you have less than $40,000 in equity, you keep the home.  Ontario residents have no such exemption.