Facing Bankruptcy in Alberta? Here’s What You Can Keep
If you’re considering bankruptcy, chances are you’re already carrying a heavy emotional and financial burden. Many people assume that filing for bankruptcy means losing everything—but that’s simply not true. In fact, Alberta’s provincial laws are among the most protective in Canada, ensuring you can hold on to the essential items you need to rebuild your life with dignity.
Let’s walk through what Alberta’s 2025 asset exemption rules really mean—and how they’re designed to help you make a fresh start.
Understanding How Exemptions Work: It’s About Equity, Not Market Price
Before we dive into the list, it’s important to understand how asset exemptions are calculated.
Exemptions apply only to the equity you hold in an asset—not its full value. Equity is what you actually own outright. It’s the asset’s current value minus any debt secured against it.
Also, the value used in bankruptcy isn’t retail or replacement cost—it’s what the item would sell for at a garage sale or liquidation auction. That’s a big advantage, especially when it comes to used household goods or clothing, which tend to have low resale value.
Fully Exempt Assets – No Limits, No Risk of Losing Them
These are the items you get to keep, regardless of their value:
- Food and Fuel: Enough to last your household for up to 12 months.
- Medical and Dental Aids: Includes things like glasses, hearing aids, prosthetics, prescriptions—fully protected.
- RRSPs, RRIFs, LIRAs, DPSPs, RDSPs: Exempt
- RESPs: Protected since 2014—set aside for your child’s future.
- Life Insurance: If your beneficiary is your spouse, child, parent, or grandchild, the cash value is exempt.
- Government Income Supports: Programs like AISH, Alberta Works, or a widow’s pension are protected—but must be kept in a separate account.
- Pensions: Fully exempt if regulated by provincial or federal legislation.
Partially Exempt Assets – Protected Up to a Limit
These assets are protected up to specific equity amounts:
| Asset | 2025 Equity Limit |
| Primary Residence | Up to $40,000 equity (shared if co-owned) |
| Vehicle | Up to $5,000 equity |
| Furniture & Appliances | Up to $4,000 total |
| Clothing (You + Dependents) | Up to $4,000 total |
| Tools of Trade (Work Equipment) | Up to $10,000 equity |
Special Exemptions for Farmers
If you’re operating a farm, you have additional protections:
- Farmland: Up to 160 acres, as long as it includes your home and is used in your farming operation.
- Farm Equipment & Supplies: Everything necessary to sustain your farm for the next 12 months—tools, seed, feed—remains protected.
Real-Life Examples: How Exemptions Apply
Let’s break this down with a few everyday scenarios.
- Car Example:
- Suppose your vehicle is worth $10,000, and you owe $6,000 on the loan. That leaves $4,000 in equity—well under the $5,000 limit.
- You get to keep the car.
- Home Example 1:
- Your home is valued at $300,000, and you owe $260,000. That’s $40,000 in equity.
- You’re within the exemption and can keep your home.
- Home Example 2:
- Same home, but now you owe only $250,000. That’s $50,000 in equity.
- You’ll need to pay the $10,000 overage or consider surrendering the property.
What Happens If You Have More Equity Than the Limit?
If your asset’s equity exceeds the allowable exemption, don’t panic—there are still options:
- You may be able to buy back the excess from the trustee over time.
- Or, you could choose to surrender the asset, and the trustee will return your exempt portion from the sale proceeds.
This is often handled through monthly payment plans or, in some cases, refinancing.
Important Exceptions You Need to Know
While Alberta’s rules are generous, there are a few exceptions that can affect your case:
- Secured Loans (PMSIs): If you miss payments on a loan (like your car), the lender can still repossess it, regardless of the exemption.
- Suspicious Transfers: Gifting or transferring assets before filing could be reversed by the trustee.
- Artificially Inflating Equity: Paying down your mortgage just before filing might raise red flags.
- Government Liens or Judgments: Statutory liens (like unpaid taxes) may override exemptions.
Will You Lose Your House or Vehicle?
Here’s a quick breakdown:
Your House:
- If equity is $40,000 or less, and payments are current—you keep it.
- If equity is more than $40,000, you may need to pay the difference or risk losing the home.
Your Vehicle:
- If equity is $5,000 or less, you keep the vehicle.
- If equity exceeds the limit, you’ll need to repay the excess or surrender the car.
Only one vehicle is exempt—unless the second is required strictly for work and fits under the tools-of-trade exemption.
Summary: What You Can Keep and What Might Be At Risk
Fully Exempt:
- Food, fuel, medical supplies
- Government assistance (AISH, Alberta Works)
- Pensions, RRSPs, RESP, RDSP
- Basic household items and clothing
- Life insurance with family beneficiary
Partially Exempt:
- Home: Up to $40K equity
- Vehicle: Up to $5K equity
- Tools: Up to $10K
- Household furnishings: Up to $4K
- Clothing: Up to $4K
Non-Exempt Assets:
- Cash in bank accounts
- TFSAs, stocks, crypto, or other non-registered investments
- Luxury items: boats, second vehicles, vacation homes
- Tax refunds from pre-bankruptcy periods
- Lottery wins or windfalls received before discharge
Download: Alberta Bankruptcy Checklist (2025)
Quickly review what assets are fully protected, partially exempt, or must be surrendered.
📄 [Click here to download your free checklist]
A Fresh Start—Not a Financial Wipeout
Bankruptcy in Alberta is not about stripping you of everything. It’s about clearing unmanageable debt while protecting the essentials—your shelter, your transportation, your health, and your future savings.
Imagine being able to reset your financial life while still keeping your home, your vehicle, and your retirement accounts intact. That’s the intent behind Alberta’s exemption laws—and it’s why so many choose this path when other debt options fall short.
Get Personalized Advice—We’re Here to Help
Everyone’s financial situation is different. Whether you’re a single parent worried about your home, a tradesperson concerned about keeping your tools, or someone with medical needs and support payments—you deserve to understand your rights.
For a free, no-obligation consultation, speak with a Licensed Insolvency Trustee today. We’ll walk through your assets, explain your exemptions, and help you plan a brighter financial future—without judgment.
Call us now at 1-888-371-8900 Or reach out online — we’re here when you’re ready.
