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We live in Alberta and have accumulated $140K in debt. My husband owns a small business that is struggling, and has been for the past year. It is a sole proprietorship. We "own" a home in which the value is $440K, but the outstanding mortgage and secure line of credit is $310K. We spoke with a debt consolidation person about our circumstances and were told bankruptcy is our only option, but that we would keep our house. The debt is all in my husband's name due to the business, and only he would be filing bankruptcy. The non-exempt home equity was calculated at just under $15K by the consolidation person but I don't see how this is possible. I don't understand how this is calculated. It gives us hope for keeping our home, but I am worried the figure is wrong, how can I determine this? It is my understanding that the exempt allowance for my husband's portion of the equity is $20K based on the $40K home exemption allowance in Alberta so this doesn't seem to add up. Do I have rights for keeping our home because I am not filing bankruptcy? Also, much of his debt is owed to CRA, $110K, we were told we couldn't do a consumer proposal if CRA debt is over 50K, is this true? Thank you, Angie



Grant Thornton Limited



Jan 18, 2016



Hi Angie, The equity of your principal residence is calculated by subtracting the current market value of your house from the outstanding mortgage and secured line of credit. The Trustee usually allows a small, negotiable, amount for the cost of selling the real property that is deducted from the balance. That gives you a rough estimate of the net proceeds for the house. This amount is then divided by two as I assume that you and your spouse are joint owners of the real property. Half of the equity belongs to you and the other half is for your spouse. As you are aware, the first $20,000 for your spouse is protected pursuant to the Civil Enforcement Act if he decided to file for bankruptcy. The balance would be the non-exempt equity that the Trustee would request to be paid into the estate for the distribution to his creditors. Hope that helps break down the equity calculation for your home. A consumer proposal can be filed if your spouse's total debts, excluding the principal mortgage of your home, is less than $250,000. If you would like to discuss his debts and financial options please contact me at 780)442-1984.

Susan Methuen
T 403-310-8888


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