How Do I Declare Bankruptcy in Alberta?

Declaring Bankruptcy in Alberta: A Comprehensive Guide

1. Understanding Bankruptcy

Bankruptcy is a legally recognized procedure that offers relief to individuals or businesses swamped with unmanageable debt. In Alberta, the Bankruptcy and Insolvency Act governs bankruptcy, which is overseen and regulated by the Office of the Superintendent of Bankruptcy. Working closely with a licensed insolvency trustee, you can navigate the bankruptcy process and start afresh.

2. The Personal Bankruptcy Procedure

In a personal bankruptcy, some of your assets may be forfeited to repay your debts. Additionally, your income level may dictate whether you have to share a portion of your income with creditors. The law in Alberta allows you to retain certain items, such as clothing, household furnishings, work tools, and a family vehicle up to a specified value. A licensed insolvency trustee can guide you about the assets you can keep and those you must surrender.

3. Affording a Bankruptcy

The cost of a first-time bankruptcy in Alberta is approximately $1,800, excluding the value of assets you must forfeit. If you have purchased a high-value asset, such as a luxury vehicle or a recreational vehicle, you must surrender it, and the proceeds from its sale will go to your creditors. Additionally, if you earn a higher income, you may be required to pay more into the bankruptcy.

4. Types of Debts Included in Bankruptcy

Typically, bankruptcy does not include your secured debts, like housing or vehicle loans. However, unsecured debts, like credit card bills, personal loans, and taxes owed to the Canada Revenue Agency, can be included. Some forms of debt, like court-imposed fines, alimony or child support obligations, or student debt under seven years old, cannot be included.

5. Impact of Bankruptcy on Credit Score

Bankruptcy will negatively impact your credit score. For a first-time bankruptcy, it will show on your credit report for six years from the discharge date. During this period, you may face difficulty obtaining credit or loans.

6. The Bankruptcy Process

The first step towards filing for bankruptcy is understanding your debt situation. Only a licensed insolvency trustee can file a bankruptcy with the Office of the Superintendent of Bankruptcy. As part of your bankruptcy program, you must complete credit counseling sessions to build essential skills like budgeting and debt management.

7. Alternatives to Bankruptcy

Bankruptcy is often considered as the last resort for debt relief. There are other options available, like debt consolidation loans, credit counseling, debt management plans, and consumer proposals. A consumer proposal allows you to repay a portion of your debt over a set period, negotiated by your trustee.

8. Frequently Asked Questions

What are the requirements to file bankruptcy in Alberta?

To file for bankruptcy in Alberta, you must owe at least $1,000 and be unable to pay your debts. You must also be a resident of Alberta or have conducted business in Alberta within the last 12 months.

What are the consequences of filing bankruptcy in Alberta?

Filing for bankruptcy in Alberta may require you to surrender some of your assets. Your credit score will also be negatively affected.

How will filing for bankruptcy in Alberta affect my taxes?

During bankruptcy, your tax refunds may be seized by your trustee to pay off your creditors. If you owe taxes to the Canada Revenue Agency, they will be treated as an unsecured debt in your bankruptcy.

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

You may be able to continue operating your business after filing for bankruptcy in Alberta. However, you will need to comply with all outlined requirements, such as maintaining accurate financial records and reporting your income to your licensed insolvency trustee.

9. Seeking Professional Help

Declaring bankruptcy in Alberta can be a complex process. A licensed insolvency trustee can guide you through the process and help you regain control of your finances. They can help you understand the full details of your bankruptcy, including which assets need to be surrendered and how to do so.

10. Conclusion

The process of declaring bankruptcy in Alberta is not a journey to be taken lightly. It requires careful consideration and assistance from a licensed insolvency trustee. While bankruptcy can offer a fresh start, it’s crucial to remember that it does have lasting effects on your financial future. Therefore, it’s crucial to explore all possible options and seek professional advice before taking this step.

At the end of the day, the decision to declare bankruptcy is a personal one. It’s a choice that should be made with full awareness of the consequences and potential benefits. If you’re struggling with debt and considering bankruptcy, remember: you’re not alone, and help is available.

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