Bankruptcy Alberta Archive

A number of assets you own are exempt from seizure in a bankruptcy. In Alberta, a bankrupt is eligible to keep a car worth up to $5,000.00, or if you owe money against it, equity therein up to $5,000.00. Equity is the value of the car less what you owe against it. If the car is leased, it is likely that you will have very little equity, if any, and you can keep the car as long as you make the payments.
In Alberta bankrupt individuals are allowed to keep furniture up to a liquidation value of $4,000.00, or $8,000.00 per couple. The relevant value would be its auction value, not the price you paid, or the replacement cost. Pensions are exempt from seizure and remain so, as long as you don’t cash them in or convert them to cash while bankrupt.
We do have some bad news however. The Courts have determined that RESP‘s are property of a bankrupt aailable to the creditors in a bankruptcy. Funds held for children by a parent and which can be cashed by the parent are the parent’s funds, not the children’s. If one cashes the RESP‘s prior to bankruptcy, in contemplation of a bankruptcy, you will be required to reimburse your bankruptcy estate before you will receive your discharge from bankruptcy.

Based on the split, it appears that you have a one-fifth interest in the home, and that it is not your principal residence. If you go bankrupt, your Bankruptcy Trustee will have to deal with or liquidate your interest, converting it into cash for distribution to the creditors in your bankruptcy. It is likely that your Bankruptcy Trustee will have to lien the property to secure payment for your bankruptcy estate.
Our Alberta Bankruptcy Trustees would prefer to sell the one-fifth interest to your siblings, rather than force a sale and division of proceeds.
It is difficult to say exactly what will happen in a bankruptcy. It will depend on how much the house is worth, whether one or all of your siblings have the funds to purchase your interest, and whether they even want to.
If your siblings don’t want to sell the house and split the proceeds, or one or more of them don’t want to buy your interest, and do not cooperate with the Bankruptcy Trustee, it is very likely that resolution will be rather costly and messy, and could affect your discharge from bankruptcy. The Bankruptcy Trustee will be entitled to your share of the rent while the issue is being resolved. You may want to speak to your siblings before you file bankruptcy.

Generally speaking, car loans financed by the credit arm of a car company are secured debts and the loan must be paid even if you go bankrupt. This presumes, of course, that you want to keep the car. In Alberta, a bankrupt or debtor is allowed to keep a car if its value or the equity therein does not exceed $5,000.00. Equity is determined by taking the value of your car and subtracting what you owe. If that number exceeds $5,000.00, the portion above $5,000.00, if any, must be paid into your bankruptcy estate in order to retain the car.
Bankruptcy Alberta and its sponsoring Bankruptcy Trustees usually allow their bankrupt clients to pay the excess equity through monthly installments. If you car is worth less than what you owe and you go bankrupt, you may want to consider surrendering the car to Chrysler Credit. This, of course, depends on whether another car is, or can be, available to you.