Understanding Bankruptcy in Alberta: What Assets Can You Retain?
Financial hardships can befall anyone unwittingly. It could be due to a sudden loss of employment, an unexpected dip in earnings, the aftermath of a painful divorce, or just poor financial decision-making. When the weight of your debts overshadows your monthly earnings, declaring bankruptcy might be the only practical way out.
The Bankruptcy Process: What Occurs?
When you decide to declare bankruptcy, be prepared to part with some of your assets. Consequently:
- An automatic stay will be granted, halting all actions by creditors seeking debt repayments.
- You get to wipe out your debts, freeing you from some or all of your financial commitments.
- A bankruptcy trustee will be assigned to oversee the management of your assets and the settlement of your debts.
The nature of your debts will dictate the extent to which they can be eliminated through bankruptcy.
Non-collateralized debts encompass credit card dues, personal loans, certain student loans, and medical expenses. Bankruptcy can wipe out these types of debts.
Loans backed by assets, known as collateral, cannot be wiped out. For instance, in a mortgage, the house serves as the collateral. If the homeowner fails to make mortgage payments, the house could be seized by the mortgage lender. The same applies to car loans for new car purchases. These types of loans are not protected in bankruptcy.
Other Exemptions in Bankruptcy
Certain responsibilities like child and spousal support payments, court-imposed fines, or restitution payments cannot be wiped out during bankruptcy proceedings.