How to File Bankruptcy in Alberta

What is personal bankruptcy?

Personal bankruptcy is a legal process under the federal Bankruptcy and Insolvency Act. You assign your non-exempt assets to a Licensed Insolvency Trustee, who distributes them to your creditors. In return, most of your unsecured debts are eliminated when you receive your discharge.

Only a Licensed Insolvency Trustee can administer a bankruptcy. The trustee handles every step, from the initial filing with the Office of the Superintendent of Bankruptcy to your eventual discharge. Once you file, a stay of proceedings stops all collection calls, wage garnishments, and legal actions from your unsecured creditors.

The rules are federal, so bankruptcy works the same way whether you live in Calgary, Edmonton, or Red Deer. The one exception is asset exemptions, which are set by provincial law.

Who qualifies for personal bankruptcy in Alberta?

You can file for bankruptcy in Alberta if you meet three conditions. You must owe at least $1,000 in total debt. You must be insolvent, meaning you cannot pay your debts as they come due. And you must be a Canadian resident or have property or a business in Canada.

There is no maximum debt threshold for bankruptcy. If your unsecured debt exceeds $250,000 (excluding your mortgage), a consumer proposal is not available, but bankruptcy is. You do not need to prove that you tried other options first.

How does the bankruptcy process work step by step?

Step 1: Initial consultation

A bankruptcy starts with a free consultation with a Licensed Insolvency Trustee. The trustee reviews your income, expenses, assets, and debts. If bankruptcy is a sensible route given your situation, the trustee explains the process, your duties, and what you can expect to keep.

Step 2: Filing the assignment

The trustee files an assignment in bankruptcy with the Office of the Superintendent of Bankruptcy. From that day, a stay of proceedings protects you from creditors. Collection calls stop. Wage garnishments end. Any pending lawsuits from unsecured creditors are halted.

Step 3: Duties during bankruptcy

You have specific duties while bankrupt. You must submit monthly income and expense reports to the trustee. You must attend two mandatory financial counselling sessions. You must surrender your tax refunds and any non-exempt assets. If you have surplus income, you make monthly payments to the trustee.

Step 4: Discharge

For a first-time bankruptcy with no surplus income and no opposition from creditors, you receive an automatic discharge after nine months. If you have surplus income above $200 per month, the discharge extends to 21 months. A second bankruptcy lasts 24 months without surplus income, or 36 months with it.

What does bankruptcy cost in Alberta?

The base cost of a first-time bankruptcy with no surplus income and no non-exempt assets is $1,800 plus applicable taxes, paid in monthly instalments over nine months. This covers the trustee’s fees, the two counselling sessions, and the government filing fee.

If you have surplus income, your costs go up. The government sets monthly net income thresholds based on family size. As of 2025, the thresholds are as follows.

Family size	Monthly net income threshold
1 person	$2,666
2 persons	$3,318
3 persons	$4,080
4 persons	$4,953
5 persons	$5,618
6 persons	$6,336
7+ persons	$7,054

Source: Office of the Superintendent of Bankruptcy Canada – Directive No. 11R2-2025, Surplus Income

If your net income exceeds the threshold for your family size by more than $200 per month, you pay 50% of the excess to your trustee each month. A single person earning $3,166 per month has $500 in surplus income, which means a monthly payment of $250. That surplus income also extends a first bankruptcy from 9 months to 21 months.

What assets can you keep in bankruptcy in Alberta?

When you file for bankruptcy, you surrender your non-exempt assets to the trustee. What you can keep in Alberta is set by the provincial Civil Enforcement Act. Alberta’s exemptions are among the most generous in Canada.

You can keep clothing and personal effects with a total value of up to $4,000. Household furnishings and appliances are protected up to $4,000. You can keep one vehicle with equity up to $5,000. Your tools of the trade are protected up to $10,000. Food for you and your dependants for the next 12 months is exempt with no dollar limit.

Source: Alberta Civil Enforcement Act and Civil Enforcement Regulation

The home equity rule

Alberta protects up to $40,000 in home equity. If you co-own your home, the exemption is reduced proportionately to your ownership share. If your equity exceeds $40,000, you pay the trustee the difference or risk losing the property.

That $40,000 threshold is more than three times Ontario’s limit and more than three times BC’s. For Albertans with modest equity in a property, bankruptcy does not automatically mean losing the house.

Retirement savings

RRSPs, RRIFs, DPSPs, and registered pension plans are protected in bankruptcy under the federal BIA. The protection applies regardless of the total value in your accounts. However, any RRSP contributions made in the 12 months before filing are clawed back by the trustee. This is a federal rule that applies in every province.

How does bankruptcy affect your credit?

Bankruptcy gives each included account a rating of 9 on your credit report. R9 applies to revolving credit such as credit cards, I9 to instalment loans, C9 to unsecured lines of credit, and O9 to open accounts. For context, a rating of 1 is the best and 9, assigned in bankruptcy, is the worst.

For a first bankruptcy, the record stays on your Equifax credit report for six years after your date of discharge. TransUnion removes it six years after discharge as well.

Source: Financial Consumer Agency of Canada – How Long Information Stays on Your Credit Report

A second bankruptcy stays on your report for 14 years after discharge. That is a long time to carry the worst possible rating.

You can start rebuilding your credit after discharge with a secured credit card. Most people see meaningful improvement within two to three years of consistent use.

What debts does bankruptcy eliminate?

Bankruptcy eliminates most unsecured debts. That includes credit card balances, personal loans, lines of credit, payday loans, medical bills, and tax debt owed to the Canada Revenue Agency.

Some debts survive bankruptcy regardless. Under Section 178(1) of the Bankruptcy and Insolvency Act, these include child and spousal support obligations, court fines and penalties, debts arising from fraud, and government student loans if you have been out of school for fewer than seven years.

Source: Government of Canada – Bankruptcy and Insolvency Act, Section 178

Secured debts, such as your mortgage or car loan, are not affected by bankruptcy. If you continue making those payments, you keep the asset.

Bankruptcy vs. consumer proposal in Alberta

Bankruptcy and a consumer proposal both fall under the Bankruptcy and Insolvency Act. They solve the same problem, but they work differently. The table below breaks down the main differences for Alberta residents.

	Bankruptcy	Consumer proposal
Assets	Non-exempt assets surrendered	You keep everything
Duration	9 to 21 months (first)	Up to 5 years
Monthly payments	Vary based on surplus income	Fixed for the full term
Surplus income	Applies, extends duration and cost	Not applicable
Credit rating	9 (e.g. R9, I9)	7 (e.g. R7, I7)
Credit report duration	6 years after discharge (first)	3 years after completion or 6 years after filing
Home equity	Exposed above $40,000	Protected entirely

Alberta’s generous exemptions narrow the gap between bankruptcy and a consumer proposal compared with those in other provinces. If you have less than $40,000 in home equity, a vehicle worth under $5,000, and no surplus income, bankruptcy finishes in nine months, and you keep your assets.

That said, anyone with equity above $40,000, a higher income, or income that fluctuates is still better off in a consumer proposal. A consumer proposal locks in your payments from day one, regardless of what happens to your income.

As of 2025, 86% of Alberta insolvency filings were consumer proposals, not bankruptcies. That is the highest share of any province in Canada.

Source: Office of the Superintendent of Bankruptcy Canada – Insolvency Statistics, Q4 2025

Alberta bankruptcy filings in 2025

As of 2025, 18,876 Albertans filed for insolvency. Of those, 2,615 were bankruptcies.

	Alberta (2025)	Canada (2025)
Total consumer insolvencies	18,876	140,457
Bankruptcies	2,615	30,289
Consumer proposals	16,261	110,168
Bankruptcy share of filings	13.9%	21.6%
Year-over-year change (total)	-0.6%	+2.3%

Source: Office of the Superintendent of Bankruptcy Canada – Insolvency Statistics, Q4 2025

Alberta is the only major province where total insolvency filings declined in 2025. The bankruptcy share of 13.9% is the lowest of any province, reflecting both the generous exemptions and the strong preference for consumer proposals.

Frequently asked questions

How long does bankruptcy last in Alberta?

A first-time bankruptcy with no surplus income lasts nine months. If you have surplus income above $200 per month, it extends to 21 months. A second bankruptcy lasts 24 months without surplus income, or 36 months with it.

Will I lose my house if I file for bankruptcy in Alberta?

Alberta protects up to $40,000 in home equity. If your equity is below that amount, you keep your home. If equity exceeds $40,000, you pay the trustee the difference or risk losing the property. For joint owners, the exemption is reduced proportionately to your ownership share.

Will I lose my car in bankruptcy?

You can keep one vehicle with equity up to $5,000. If your vehicle is worth more after subtracting any loan balance, you pay the trustee the difference or surrender it.

Can I file for bankruptcy on CRA tax debt?

Yes. The Canada Revenue Agency is treated as an unsecured creditor. Income tax, GST/HST, and other CRA amounts owing are included in bankruptcy and eliminated on discharge.

How much does it cost to go bankrupt in Alberta?

The base cost for a first-time bankruptcy with no surplus income or non-exempt assets is $1,800 plus applicable taxes, paid in monthly instalments. If you have surplus income, you pay 50% of the amount above the government threshold each month. The total cost depends on your income, your assets, and how long the bankruptcy lasts.

Can I keep my RRSP if I go bankrupt in Alberta?

Yes. RRSPs, RRIFs, and DPSPs are protected in bankruptcy under the federal BIA, except for contributions made in the 12 months before filing. Those recent contributions are surrendered to the trustee. This rule applies equally across all provinces.

What is the difference between a first and second bankruptcy?

A first bankruptcy lasts 9 months (or 21 with surplus income) and stays on your credit report for 6 years after discharge. A second bankruptcy lasts 24 months (or 36 with surplus income) and stays on your credit report for 14 years after discharge. A second bankruptcy also requires a court hearing for discharge.

Can I file for bankruptcy more than once?

Yes. There is no limit on the number of times you can file for bankruptcy. However, each subsequent filing carries longer timelines, higher costs, and a mandatory court hearing for discharge.

Is bankruptcy or a consumer proposal better?

It depends on your situation. Bankruptcy is faster but comes with surplus income rules, asset surrender, and a worse credit impact. A consumer proposal keeps your assets, fixes your payments, and has a shorter credit report impact. Alberta’s generous exemptions make bankruptcy less punishing than in other provinces, but a consumer proposal is still the better option for anyone with assets or income above the thresholds.

Talk to a Licensed Insolvency Trustee

If your debts have become unmanageable and you need to understand your options, talk to a Licensed Insolvency Trustee. The initial consultation is free, confidential, and comes with no obligation.