Alberta Traffic Safety Act Not Allowed To Withhold A License After Bankruptcy

Your Driving License Can’t Be Withheld Because of Bankruptcy

The Supreme Court of Canada ruled that debts associated with Section 102 of the Alberta Traffic Act do not apply following discharge from bankruptcy.

Alberta Traffic Safety Act not allowed to withhold a license after bankruptcy: What does the ruling mean?

The Supreme Court of Canada has ruled that an Alberta law, which affects uninsured motorists who have been discharged from bankruptcy, is unconstitutional.

The ruling relates to Section 102 of the Alberta Traffic Act.

Ordinarily, if you are driving a car without insurance, and you are involved in an accident, the government will cover the cost.

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As you did not have insurance at the time of the crash, the government would expect you to pay back the costs incurred, including penalties and fees.

If you are unable to do this, the government has the right to withhold your driving license.

In the case of individuals who have filed for bankruptcy, there are complications.

Prior to the ruling, the Alberta Government had the right to continue to withhold the license, despite the fact that the debt has effectively been cleared through bankruptcy or via a consumer proposal.

The problem for lawmakers and motorists was that federal and provincial legislation differed, and this caused confusion.

As federal law takes precedence over provincial law, in the case of this ruling, the principle of paramountcy (federal laws being prioritised) was employed to ensure that federal rules were enforced.

Before the ruling, in Alberta, there were examples of motorists experiencing challenges, despite the concept of paramountcy.

In 2015, one case brought the conflict to an end: Alberta (Attorney General) vs. Moloney.

The impact on other drivers

The 2015 case was impactful for drivers and lawmakers, and it set a precedent for individuals facing the prospect of losing their license.

The ruling meant that people who had been declared bankrupt and those who had settled debts through a consumer proposal were able to keep hold of their driver’s license.

All nine judges attending the hearing agreed that the Alberta Traffic Act made it difficult for individuals to go through rehabilitation, one of the key objectives of the federal Bankruptcy and Insolvency Act.

The decision provided clarity and ensured drivers who have been through bankruptcy were able to keep driving.

Advice about bankruptcy

Bankruptcy offers a solution for people who are facing severe financial difficulties, and it is often a last resort when other options to clear debts and pay bills are no longer viable.

If you need help with managing debt, or you’d like information about filing for bankruptcy, seeking expert advice is the best course of action.

Bankruptcy is not recommended for everyone, and it’s essential to explore all the options on the table first.

If you have questions or concerns, our team is on hand and ready to take your call.


A landmark ruling in 2015 meant that drivers who had filed for bankruptcy in Alberta were excused from having their licenses withheld.

Federal laws take precedence over the Alberta Traffic Safety Act, which had previously set out guidelines allowing for licenses to be taken.

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