The property exempt from seizure is set by the provinces and territories and applies to the equity in the asset.
Equity is the excess that the value of an asset has over any charges or encumbrances against that asset.
For example, if you have a car worth $10,000 and there is a $6,000 secured debt against it then the equity in the car is $4,000. In Alberta the exemption for a car is $5,000 so in this example you are entitled to the equity of $4,000 and the unsecured creditors cannot take this.
Alberta Bankruptcy Exemptions are:
- Food required by the debtor and his/her dependants during the next 12 months;
- Necessary clothing of the debtor and his/her dependants up to a value of $4,000;
- Household furniture and appliances up to a value of $4,000;
- One motor vehicle not exceeding a value of $5,000.00;
- Medical and dental aids required by the debtor and his/her dependants;
- Where the debtor is a bona fide farmer and whose principal source of livelihood is farming 160 acres if the debtor’s principal residence is located on that 160 acres and that the 160 acres is part of the debtor’s farm;
- The equity in the debtor’s principal residence, including a mobile home, up to a value of $40,000.00;
- If the debtor is a co-owner of the residence, the amount of the exemption is reduced to an amount that is proportionate to the debtor’s ownership interest;
- Personal property (i.e. tools, equipment, books) required by the debtor to earn income from the debtor’s occupation up to a value of $10,000;
- Where the debtor’s primary income is from farming operations, personal property required by the debtor for the proper and efficient conduct of the debtor’s farming operations for the next 12 months.
- Registered Retirement Savings Plans RRSPs, Registered Retirement Income Funds (RRIFs), Registered Disability Savings Plans (RDSP) and Deferred Profit Sharing Plans (DPSPs). NOTE: This went into force in Alberta on October 1, 2009.
News Flash – October 1, 2009, The following are exempt from seizure and there is no one year clawback:
Registered Retirement Savings Plans RRSPs, Registered Retirement Income Funds (RRIFs), Registered Disability Savings Plans (RDSP) and Deferred Profit Sharing Plans (DPSPs).