Declaring Bankruptcy in Alberta

Financial challenges can be overwhelming, and sometimes declaring bankruptcy seems to be the only solution. If you’re contemplating filing for bankruptcy in Alberta, this guide will provide detailed insights into the process, implications, and potential alternatives.

Understanding Bankruptcy

Bankruptcy is a federally regulated legal process designed to provide relief to individuals or businesses struggling with unmanageable debt. It involves surrendering certain assets in exchange for the discharge of debts. However, it’s important to note that this process might not be suitable for everyone, depending on their financial situation.

Bankruptcy should be seen as a last resort, and it’s crucial to explore all other debt relief options before deciding to file.

The Role of a Licensed Insolvency Trustee

A Licensed Insolvency Trustee (LIT) plays a pivotal role when declaring bankruptcy in Alberta. They guide you through the process, assess your financial situation, and help you understand your obligations and what assets you may have to surrender.

The Bankruptcy Process in Alberta

Filing for bankruptcy involves a series of steps:

  1. Assess Your Debts: The first step is to understand the extent of your debt. You need to identify all your creditors and calculate the total amount owed.
  2. Consult a Licensed Insolvency Trustee: A LIT will review your financial situation and guide you through potential debt relief solutions, including bankruptcy.
  3. File for Bankruptcy: If bankruptcy is the most viable option, your LIT will help you file the necessary documents with the Office of the Superintendent of Bankruptcy.
  4. Credit Counseling: During the bankruptcy process, you must attend credit counseling sessions. These meetings are designed to equip you with essential skills such as budgeting and debt management to avoid future financial difficulties.
  5. Discharge of Bankruptcy: Once you have fulfilled all obligations, you will be discharged from bankruptcy, releasing you from the responsibility of repaying the discharged debt.

Implications of Declaring Bankruptcy

Bankruptcy can affect your life in several ways:

  • Asset Surrender: You may have to surrender some of your assets, such as a second vehicle, luxury goods, or property equity exceeding a certain amount.
  • Income Contribution: Depending on your income, you might have to make surplus income payments into the bankruptcy estate.
  • Credit Score Impact: Bankruptcy will appear on your credit report and could make it difficult for you to obtain credit in the future.
  • Emotional Impact: Filing for bankruptcy can be emotionally challenging and may affect your personal and professional life.

Despite these implications, declaring bankruptcy can offer a fresh financial start by discharging unmanageable debts.

What Assets Can You Keep?

When declaring bankruptcy in Alberta, you’re allowed to keep certain assets, known as “exempt property”. This includes:

  • Clothing and personal effects.
  • Household furniture and appliances.
  • A vehicle up to a certain value.
  • Tools of trade up to a specific amount.
  • Equity in your principal residence up to a certain limit.

Alternatives to Bankruptcy

Bankruptcy isn’t the only solution to overwhelming debt. Other debt relief options include:

  • Consumer Proposal: This involves negotiating with your creditors to repay a portion of your debt over a specified period.
  • Debt Consolidation: This involves consolidating your debts into one loan, making it easier to manage your repayments.
  • Informal Debt Settlement: This involves negotiating directly with your creditors to lower your debt or extend your repayment period.


What are the requirements to file bankruptcy in Alberta?

To file for bankruptcy in Alberta, you must be insolvent, meaning you owe at least $1000 and are unable to pay your debts.

What are the consequences of filing bankruptcy in Alberta?

Filing for bankruptcy may require you to surrender some assets, negatively impact your credit score, and affect your ability to obtain credit or certain types of employment.

How will filing for bankruptcy in Alberta affect my taxes?

When declaring bankruptcy in Alberta, you may have to pay taxes on any forgiven debt, and your tax refunds may be seized to pay off your creditors.

Can I operate a business if I file for personal bankruptcy in Alberta?

It may be possible to continue operating your business after filing for bankruptcy in Alberta. However, you’ll need to comply with certain requirements and obtain permission from your LIT.


Declaring bankruptcy in Alberta can be a complex process. However, with the help of a Licensed Insolvency Trustee, you can navigate this process confidently. It’s important to note that bankruptcy isn’t the only solution to overwhelming debt. Therefore, it’s crucial to explore all your options and make an informed decision about the best course of action for your financial situation.

Find Your Personal Debt Relief Solution

Licensed Insolvency Trustees are here to help. Get a free assessment of your options.

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