What Can I Keep If I Go Bankrupt?

Going bankrupt is a challenging and stressful time. Rhonda Fox-Miles at Fox Miles and Associates’ most frequent question is: What can I keep if I go bankrupt?  Bankruptcy Exemptions are assets that the government feels are reasonable to keep.  In Alberta, what you can make exempt is outlined by provincial legislation called the Civil Enforcement Act

There is a misconception that bankruptcy’s intent is punitive.  You will not lose all of your assets during bankruptcy.  Its purpose is to protect you from creditors and allow you to make a fresh start and lead an everyday life without the burden of impossible debt.


One of the main principles we need to understand to get started is equity.  Equity is the difference between the value of an asset and how much you own on that asset.

For example, if your car is worth $10,000 and you owe $6,000, your equity is $4,000.

In this guide, you will learn how bankruptcy affects:

  • Your Home
  • Your Automobile
  • RRSP, RESP, & Pensions
  • Personal Items
  • Tools of Your Trade
  • Social Allowance
  • Farmers

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How to claim bankruptcy

Bankruptcy & Your Home

For many Albertans, their home is their number one asset. The fear of losing your home is one of the most stressful feelings a person can experience. Fortunately, Alberta’s bankruptcy rules specify that you can keep up to $40,000 of equity in your principal residence.  The amount gets reduced by your share of the home if you are a co-owner. You do not lose your home necessarily.  Contact a Licenced Insolvency Trustee for a more comprehensive breakdown of your home equity and bankruptcy in Alberta.

Your Automobile & Bankruptcy

After your home, one of the most important assets you may have is your automobile. In Alberta, $5000 of equity in your vehicle is exempt.  That means if you have a vehicle with more than the specified equity, you will have to pay the difference. Unsecured creditors cannot take this equity away from you when you declare bankruptcy. For example, if you owned a car worth $20,000 and owed payments of $10,000, you would have $10,000 equity.  You would have $5000 of equity that is untouchable but would have to make up the other $5000.  Contact a Licenced Insolvency Trustee to find out more.

Social Allowance

Social allowance, handicap benefit, or a widow’s pension are exempt if they are separate from your other funds. It can be tricky, so your best bet is to call an expert.


Bankruptcy for farmers is different than for other people. The intent is to allow you to keep running your farm during bankruptcy. Up to 160 acres of land are exempt if your principal residence is on the land and is part of your farm. Over the next 12 months, any personal property necessary for your farm operations is also exempt from bankruptcy.  Please contact an Alberta Insolvency Trustee for more details.

Signing bankruptcy

RRSP, RESP, & Pensions

Fortunately, in Alberta, Registered Retirement Savings Plans (RRSPs), Registered Education Savings Plans (RESPs), Pensions, Registered Retirement Income Funds (RRIFs), and Registered Disability Savings Plans (RDSPs) are all protected when you go bankrupt.

Personal Items

Many personal items are exempt from your creditors during bankruptcy. The government still allows you to live life as best as possible during this time.

  • Food for you and your dependents for up to 1 year is exempt
  • Clothing for you and your dependents up to a value of $4000
  • Household furnishings and appliances up to $4000
  • No limit on dental or medical aids
  • Certain life insurance policies

Tools Of Your Trade​​

Bankruptcy does not mean the end of your livelihood regarding your job.  There is a limit in the value of the tools of the trade you can keep, however, of $10,000.  This limit intends to keep you working while bankrupt, even if your profession requires substantial material equipment. This exemption captures any property that is necessary for you to earn income.


Many people fear losing everything if they declare bankruptcy. It is not the case! Bankruptcy does not mean losing everything. Often there is a lot of property that is protected. In many cases, a Consumer Proposal is a better solution. You should schedule a consultation with a Licenced Insolvency Trustee sooner than later to determine your best option. Expert advice can often take the stress and anxiety out of the situation. Help is out there; you aren’t alone.