Most residents believe a Lethbridge bankruptcy should be their last resort for getting out from under severe debt burdens. While this is true in some cases, how can you determine what is best for you if you do not take the time to learn what is involved in each available debt solution?
When it comes to a Lethbridge bankruptcy, residents often wait until they have no other choice before considering bankruptcy. One of the main reasons for this is what they may have heard about losing assets if you declare personal bankruptcy.
While the federal Bankruptcy and Insolvency Act (BIA) of Canada gives filers the right to eliminate their debts in exchange for surrendering some of what they own, the specifics of what you can keep and what you must surrender are left up to each Province.
The BIA guarantees that no Canadian citizen anywhere will lose all they own, but residents of some provinces stand to lose more than residents of other provinces. Alberta has some of the most generous exemption allowances of any province.
As an example, an Alberta resident is entitled to keep their home in a bankruptcy filing if the equity in the home is less than $40,000 while a resident of Quebec has no home equity exemption allowance.
You can find categories of personal asset exemptions and the allowed value in
Alberta on the Internet. However, there simply is no substitute for scheduling an appointment with a licensed bankruptcy trustee in Alberta to learn exactly what assets you own that might be at risk.
Some Lethbridge residents lose nothing when they file for bankruptcy, while others can keep some of what they own even if the asset exceeds the exemption allowance. Here is how that works.
Once you formally file for a Lethbridge bankruptcy, you meet with the trustee managing your bankruptcy to review your assets and determine their value.
For assets like furniture and clothing, the trustee uses estimates of what you might be able to sell the asset for at a garage or estate sale. For major assets like a car and your home, trustees use appraised values and deduct any amount you still owe on the asset and the cost of selling it.
The remainder is equity and if the amount exceeds the exemption, you must surrender the asset, but only in theory. In actual practice, many Canadians keep the asset by contributing the difference into the bankruptcy estate created at the time of filing.
The estate is simply an escrow account where the trustee deposits proceeds from the sale of assets and income contributions you might have to make while in bankruptcy. Trustees later distribute monies in the estate to creditors with valid claims.
In Alberta, the exemption for a vehicle is currently $5,000. If you have $7500 in equity in the vehicle, you can keep it by contributing the cash difference
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