How Does Bankruptcy Affect Exempt Assets In Alberta?

Bankruptcy is a legal proceeding that offers a fresh start to individuals overwhelmed by debt. However, the process raises a significant concern: what happens to your assets? In Alberta, as in the rest of Canada, specific assets are exempt from bankruptcy proceedings, meaning you get to retain them. This article delves into the details of these exemptions and how they work.

Federal and Provincial Exemptions

The assets you can keep during bankruptcy are classified into two categories: federal and provincial exemptions.

Federal Exemptions

Federal exemptions apply universally across all bankruptcy cases in Canada. They primarily include:


Locked-in pensions

Certain Registered Retirement Savings Plans (RRSPs), like those insured for life or with contributions made over a year ago.


Note: Federal exemptions are subject to conditions. If you have used an exempt asset as collateral for a loan, you effectively give up your exemption until the loan is fully repaid.


Provincial Exemptions

Provincial exemptions vary by province. Detailed information on provincial exemptions in Alberta is available here.

Understanding Exemptions

Exemptions are crucial aspects of bankruptcy laws. They are designed to protect debtors from losing everything and help them get back on their feet after bankruptcy. Here’s a closer look at how these work.


Pensions are generally exempt from bankruptcy, particularly those that are locked-in. This means that creditors cannot access these funds, safeguarding your retirement savings.


Certain RRSPs are also exempt, especially those with life insurance or those where contributions were made over 12 months prior.


Important: The exemption on RRSPs is only valid if the RRSP has not been used as collateral for a loan.


Collateral-based Loans

Assets used as collateral for loans, such as house mortgages, car loans, or furniture loans, may complicate exemptions. In such cases, the exemption is effectively given up until the loan is fully repaid.

The Alberta Scenario

In Alberta, the local provincial exemptions provide additional protection for debtors. These exemptions are specific to the province and may differ from those in other areas.


Understanding how bankruptcy affects exempt assets in Alberta is crucial for anyone considering this debt relief option. While bankruptcy can offer a fresh financial start, it’s essential to be fully aware of the ramifications, particularly on your assets. Consulting with a certified professional can provide clarity and help you navigate the process with confidence.

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