One of the major concerns of anyone thinking of declaring bankruptcy in Lethbridge is what will happen to their possessions. People wonder – will I lose my home? Will I lose my car? What am I allowed to keep?
There is probably no greater source of confusion over the impact of declaring bankruptcy in Lethbridge or anywhere in Canada is what happens to what you own. The confusion is fueled in part by the fact that – unbeknownst to many Canadians – there are significant differences in asset exemption allowances across the Provinces in Canada.
Although our bankruptcy laws are set out in a federal act – the Bankruptcy and Insolvency Act – the issue of asset protection is left up to the Provinces. The BIA (Bankruptcy and Insolvency Act) is meant to be fair to both debtors and creditors. Debtors who are insolvent — they no longer have the ability to make timely payments on what they owe with the income they make – are forgiven most and in some cases all of what they owe and get a chance to start over with a clean slate.
However, creditors are entitled to recoup some of what they are owed from people who can afford to pay. The Act stipulates that no one loses everything they own and are allowed to keep assets needed to maintain a life without undue hardship. Obviously, if you own a home in Lethbridge and a cabin in the mountains, you can live without the cabin and it will be seized and sold with the proceeds distributed amongst the creditors. But what about your home?
If you have friends in Ontario or Manitoba who declared bankruptcy and lost their homes you need to know Alberta is different. Ontario and Manitoba have no exemption allowances for home ownership while Alberta has a generous $40,000 allowance.
This means if you’re declaring bankruptcy in Lethbridge or anywhere in Alberta and you have less than $40,000 equity in your home, you will not lose your home in bankruptcy.
And for residents of Provinces without home allowances or residents of Alberta with too much equity in their homes there are ways to essentially “buy back” your home from the bankruptcy estate established for creditor repayment to avoid losing it.
For specific details about what assets you will be allowed to keep you need to meet with a bankruptcy trustee as soon as you begin thinking about declaring bankruptcy in Lethbridge. You may not know there are viable alternatives to bankruptcy which allow you to cut your debt from 30% to 70% and repay the remainder within a maximum of 5 years while protecting all you own. This alternative is called a consumer proposal and a trustee can determine if you qualify for one.
Declaring bankruptcy in Lethbridge is a serious step that has both significant advantages and disadvantages. To get the facts straight and to see if you have alternatives to bankruptcy available to you meet with a trustee as soon as possible. An initial consultation is free so there is no reason not to see one and find out if bankruptcy is right for you.
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