Bankruptcy Exemptions & Consumer Proposals in Alberta

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Bankruptcy exemptions in Alberta

When you find yourself struggling to pay your debts, there may come a point where bankruptcy seems like the only viable option.

Alberta has the highest rate of consumer debt in Canada, followed by Calgary and Edmonton and as a result, bankruptcies have increased by 13.5%.

There are many debt management options out there for Alberta residents such as debt consolidation, debt settlement and consumer proposals. However, if none of these options are suitable, then bankruptcy may be the right course of action.

If going through the bankruptcy process, there are certain exemptions that cannot be seized by debt collectors.

Harris & Partners is a specialist Licensed Insolvency Trustee with offices based across Canada, providing debt relief solutions to individuals and businesses struggling to manage their debt.

If you’re enduring a difficult financial situation and considering going through the bankruptcy process or a consumer proposal, contact us today for a free consultation with one of our licensed insolvency trustees and we’ll help you to build a stronger financial future.

How does a consumer proposal work in Alberta?

According to the Bankruptcy and Insolvency Act, a consumer proposal is a legally binding process whereby an agreement is made with creditors to negotiate a more manageable form of debt repayment.

Your repayment amount will primarily be determined by your assets and income and payments will be spread over a period of five years.

A consumer proposal can reduce the amount of debt you have to pay back to debt collectors and can be a great method of debt consolidation for those who cannot afford to pay back all of their debts.

If you are based in Alberta and want to find out more about the process of filing a consumer proposal, get in touch with us today.

Alberta bankruptcy exemptions

In Alberta, assets may be exempt from seizure during bankruptcy depending on how much equity is in them. For example, if your car is worth $10,000 and you have $6,000 remaining to pay it off, the amount of equity in that car is $4,000. Because you are allowed to keep one car under the value of $5,000 in Alberta, you would not have to forfeit your car to the creditors. Other exemptions include:

  • Enough food to last for a period of 12 months.
  • Clothing valued up to $4,000.
  • Household furnishings and appliances valued up to $4,000.
  • One motor vehicle valued up to $5,000.
  • Personal property used to earn income that is valued up to $10,000.
  • All medical and dental aids.
  • Your principal residence if it is under $40,000. For co-homeowners, this amount can be reduced depending on how much you own of the home.
  • RRSPs, RESPs and pensions.
  • Some life insurance policies.
  • Farmers: Up to 160 acres of land, plus any equipment needed for the next 12 months.

How can I find out more?

If you want to find out more about bankruptcy exemptions and consumer proposals in Alberta, please contact your local Licensed Insolvency Trustee for further information.

Frequently asked questions

When can I file for bankruptcy in Alberta?

You are able to file for bankruptcy in Alberta if you have unsecured debts of at least $1,000 but typically, you should not consider bankruptcy unless your debts are significantly higher than this figure. 

Can I keep my home?

You are entitled to keep your home during bankruptcy if the equity isn’t valued at more than $40,000; the equity rather than the market value will be considered.


If you are a co-owner of your home, the exemption amount will be smaller. In the case of owning half of your home, the exemption amount will instead be $20,000.

Can I keep my car?

You are able to keep a vehicle valued up to $5,000 and this also applies to car loans that you are paying off. For instance, you may be able to keep a car worth $10,000 if you have paid $5,000 of it off.


Are basic necessities exempt?

When it comes to food and clothing, these are considered to be basic necessities. Food is completely exempt for the subsequent 12 month period as well as clothing valued up to $4,000.

How will my pension plans be affected?

There are certain types of savings and life insurance plans that are exempt in Alberta during bankruptcy such as RRSPs (Registered Retirement Savings Plans), RRIFs (Registered Retirement Income Funds) and DPSPs (Deferred Profit Sharing Plans). Contributions made within the past year can be seized by creditors but any other contributions/transfers are safe.


RESPs (Registered Education Savings Plans) are exempt in Alberta but the money must be used only to fund post-secondary education for a beneficiary.

Is my work equipment protected?

Any trade tools needed for work purposes valued up to $10,000 are exempt, including equipment, tools and anything needed to do a job.

Are health aids exempt?

Any form of health aids, including medical and dental, are exempt in bankruptcy, as well as any aids for dependents.

Are my savings plans safe?

The Civil Enforcement Act in Alberta protects registered savings plans from seizure and this applies to Registered Retirement Savings Plans (RRSPs), Registered Retirement Income Funds (RRIFs), Deferred Profit Sharing Plans (DPSPs) and Registered Disability Savings Plans (RDSPs).

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