The Cost of Filing Bankruptcy in Edmonton, Alberta

When you are considering the filing bankruptcy in Edmonton, Alberta, it is important that you understand how the total cost of a bankruptcy will be determined. This total cost can be broken down into 4 key areas; minimum costs, surplus income requirements, taxes and assets.

1. Minimum costs

Each individual trustee will require you to make a minimum payment to the trustee’s office.  This payment is often divided over an 8 to 12 month period, but each trustee will provide a certain amount of flexibility if this simply isn't affordable.  This minimum cost is set to ensure that the trustee will have sufficient monies to cover the cost of the administration of the file.  These costs are varied but usually include all the necessary court fees, registration fees, mailing costs, counselling fees and other administration costs associated with a bankruptcy.  While standard practice across the industry is to include all of these fees in the minimum cost, it is important that you clarify this in advance with your trustee so that you are not surprised by any of these types of costs later. 

2.  Surplus

In addition to the administrative costs there is a Surplus Income Guideline that is sent to every trustee in Canada by the Superintendent of Bankruptcy (a division of the Federal Government).  This guideline looks at your income level and the number of dependents you support to determine if you qualify for the minimum cost, and if not, what your payments would be. 
It is important to note that this surplus payment is calculated each month during the bankruptcy, and. as a result, if your income changes part way through a bankruptcy, your required payment to your trustee may also change. 

3.  Tax and GST

When you file a bankruptcy you must be prepared to lose any GST credits or tax refund cheques for the year of bankruptcy and any year prior to that time.  So if you filed bankruptcy in February 1, 2008, all tax refunds for 2008 and previous years will be sent directly to the trustee’s office and used for the general benefit of your creditors.  This is also true for GST cheques.

4.  Assets

While many people believe you have to surrender all of your assets to the trustee when you file bankruptcy, this is not the case.  Each province has a list of assets that are protected when you file a bankruptcy. In Alberta, these exempt assets include:

  • Clothing and personal effects up to a value of $4000.00;
  • Household furnishings up to a value of $4000.00;
  • One motor vehicle up to a value of $5,000.00;
  • Equity in a principle residence up to a value of $40,000 per household;
  • Any tools or equipment you require to make a living up to a value of $10,000; and
  • Medical and dental aids required by you and your dependents.

If you have any other assets, these items are given to the trustee to be sold, and the funds become part of your bankruptcy estate to be ultimately used for the benefit of your creditors.

As you can see the cost of bankruptcy is not always something that is simple to calculate, as it really depends on both what you make and what you own.  If you are considering the filing of a bankruptcy in Edmonton it is important that you consult with a licensed trustee prior to making any decisions.  This is important so that you can fully understand which of these 4 areas will affect you, understand how the cost will be determined and help to ensure that you choose the option that fits your situation best.