Filing for bankruptcy is a complex process that involves comprehending different legal and financial concepts, one of them being exempt assets. In Alberta, specific properties are considered exempt during bankruptcy, meaning they can’t be seized by creditors. This article delves into the details of what these exempt assets are when filing for bankruptcy in Alberta.
What are Exempt Assets?
Exempt assets refer to the property that a debtor is allowed to keep even after filing for bankruptcy. The aim is to ensure that the debtor and their dependents are not left destitute and they have the means to earn a livelihood.
Alberta’s Exempt Assets: An Overview
In Alberta, these are the exempt assets:
- Essential Food: Food required by the debtor and their dependents for the next 12 months.
- Necessary Clothing: Clothing of the debtor and their dependents up to a value of $4,000.
- Household Items: Household furniture and appliances up to a value of $4,000.
- Motor Vehicle: One motor vehicle not exceeding a value of $5,000.00.
- Medical and Dental Aids: Medical and dental aids required by the debtor and their dependents.
- Farm: If the debtor is a bona fide farmer and whose primary source of livelihood is farming 160 acres if the debtor’s principal residence is located on that 160 acres and that the 160 acres is part of the debtor’s farm.
- Principal Residence: The equity in the debtor’s principal residence, including a mobile home, up to a value of $40,000.00.
- Personal Property: Required by the debtor to earn income from the debtor’s occupation up to a value of $10,000.
- Farming Operations: If the debtor’s primary income is from farming operations, personal property required by the debtor for the proper and efficient conduct of the debtor’s farming operations for the next 12 months.
- Registered Retirement Savings Plans (RRSPs), Registered Retirement Income Funds (RRIFs), Registered Disability Savings Plans (RDSP) and Deferred Profit Sharing Plans (DPSPs).
Exempt Assets: A Deeper Look
Essential Food
Food is a basic necessity and thus, it is considered an exempt asset. The debtor and their dependents are allowed to keep food that will cater to their needs for the next year.
Necessary Clothing
The debtor and their dependents can keep clothing up to a value of $4,000. This ensures they have the necessary attire for all seasons and different occasions, including work.
Household Items
Household furniture and appliances up to a value of $4,000 are exempt. These include items that are required for the daily functioning of the household such as beds, tables, chairs, kitchen appliances, etc.
Motor Vehicle
A debtor can keep one motor vehicle, provided its value does not exceed $5,000.00. This ensures that the debtor and their family can continue to meet their transportation needs.
Medical and Dental Aids
Medical and dental aids required by the debtor and their dependents are considered exempt assets. These aids may include prescription glasses, wheelchairs, dentures, etc.
Farm
If a debtor is a bona fide farmer and whose primary source of livelihood is farming 160 acres, they can keep this property. The 160 acres should include the debtor’s principal residence.
Principal Residence
The debtor can retain the equity in their principal residence, including a mobile home, up to a value of $40,000.00. If the debtor co-owns the residence, the exemption amount is proportionate to their ownership interest.
Personal Property
Personal property such as tools, equipment, books, etc., required by the debtor to earn an income up to a value of $10,000 are exempt assets. This ensures that the debtor can continue to earn a livelihood.
Farming Operations
If the debtor’s primary source of income is from farming operations, the personal property required for the proper and efficient conduct of these operations for the next year is exempt.
Registered Retirement Savings Plans (RRSPs), Registered Retirement Income Funds (RRIFs), Registered Disability Savings Plans (RDSP) and Deferred Profit Sharing Plans (DPSPs)
These financial plans are exempted to ensure the debtor has financial support during their retirement.
