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Edmonton, Calgary bankruptcy Q&A forum



James W Simms



A house is owned by a married couple (now separated). The assessed value is $430,000 and the mortgage is $360,000. The husband is living in the house with his 4 yr old son. What happens to the house when he declares bankruptcy?



Alger & Associates Inc.



Mar 03, 2013



James In the Province of Alberta, $40,000 of equity in a personal residence is exempt from seizure by the Trustee. This exemption attaches to the residence and is shared amongst the individuals on title, in this case two. It appears based on the information provided that if the property were to be sold and after payout of the mortgage and costs of sale, the equity wouold total approximately $60000, of which $40000 is exempt. The balance of $20000 is non exempt equity. If a joint title holder were to declare bankruptcy, the individual's share of non exempt equity would be payable to the Trustee. I have assumed a sale of the residence for the purposes of determining how much equity exists and accordingly how much is non exempt, It is not necessary for the property to be sold. only that the bankrupt's share in non exempt equity be paid into the bankruptcy. There are many other factors that can impact the calculation such as possible mortgage penalty, oustanding property taxes etc. I would suggest you obtain an appraisal of the residence or at least a market evaluation to give you a better idea of value. I suggest that you discuss this issue in detail with the Trustee prior to proceeding to bankruptcy. I would be happy to meet with you to discuss your situation in more detail, you may also wish to check out our website at for more information on the process. Thanks for the question.

Marie Kozlowski
T 403-296-3082


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