Bankruptcy Services
in St. Albert

Bankruptcy is a legal process, provided and regulated by the federal government, to help citizens and permanent residents overcome unmanageable debt and have a fresh start. Bankruptcy enables you to be discharged from your unsecured debts, meaning that your debts are eliminated and can no longer be enforced by your creditors.

The mechanism operates through filing official documents with the federal government, that instantly halts all creditor collection activities through a “stay of proceedings.” The key mechanisms include surrendering non-exempt assets to your trustee, monthly reporting requirements, mandatory counselling sessions, and potential surplus income payments based on government guidelines.

Standard timelines generally include 9 months for first-time filers or 21 months if surplus income payments are required. For second bankruptcies, the timeline extends to 24 or 36 months respectively.

For St. Albert and Alberta residents, eligibility to file for bankruptcy requires meeting specific federal criteria. You qualify for bankruptcy when you owe at least $1,000 in unsecured debt, cannot make your regular payments as they become due, or cannot pay all of your debts if all your property was sold.

An important restriction prevents you from filing bankruptcy independently – federal legislation mandates working with a Licensed Insolvency Trustee who handles the process. You must also be a Canadian citizen or resident, or do business in Canada, or own property in Canada.

Alberta’s Civil Enforcement Act determines what assets receive protection from seizure during bankruptcy proceedings. The protected assets include:

• Home equity up to $40,000 (if you co-own a home this amount differs based on your ownership percentage)
• Vehicle equity up to $5,000
• Household furnishings and appliances up to $4,000
• Work tools required to earn income up to $10,000
• All necessary clothing for you and your dependents
• All medical and dental aids
• All RRSPs and RESPs
• Enough food to support you and your dependents for up to 12 months

Your Licensed Insolvency Trustee assesses all assets, identifies which surpass exemption thresholds, then either sells them or allows you to pay their value to keep them. For farmers, additional exemptions apply including up to 160 acres of land and property required for 12 months of farming operations.

Bankruptcy filing involves regulated costs established by the Office of the Superintendent of Bankruptcy. The cost depends on your income, family size, and assets you own. Federal regulations set the costs with no hidden fees.

First-time bankruptcy filers without surplus income typically receive automatic discharge after 9 months. When surplus income exists (calculated based on government guidelines), the timeline extends to 21 months. The surplus income calculation takes into account your monthly income, number of people in your household, income of others in the household, and certain necessary expenses like medical costs.

First vs. Second Bankruptcy Timeline:

• First bankruptcy: 9 months (no surplus) or 21 months (with surplus)
• Second bankruptcy: 24 months (no surplus) or 36 months (with surplus)

When you file bankruptcy with joint debts (like joint credit cards or co-signed loans), your bankruptcy only eliminates your responsibility of the debt. The other person remains fully responsible for the entire debt. This often affects married couples and business partners who must plan carefully.

In Canada, forgiven debt through bankruptcy does not create taxable income for you. You won’t receive a tax slip for eliminated debts and won’t owe income tax on the amounts discharged.

Your bankruptcy doesn’t directly affect your spouse’s credit score unless they’re jointly responsible for the debts. However, lenders may consider household income when your spouse applies for credit.