Home Ownership During a Bankruptcy or Consumer Proposal

November 26, 2013

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If you’re considering bankruptcy or a consumer proposal, you might be wondering what will happen to your home. Will you lose it to your creditors? Have to sell it? Be able to keep it? The answer is: it depends.

Whether you file for bankruptcy or a consumer proposal, if you’re behind in your mortgage payments, your mortgage holder can still take steps to realize on your home. If your payments are up to date, it is unlikely that your home will be taken back by your mortgage company.

Even if your mortgage payments are up to date, if you file for bankruptcy, any equity you have in your house is considered an asset. To remain in your home, you’ll need to pay the amount of that equity to your trustee (over and above any surplus income payments you’re required to make). To determine the amount of your equity, your trustee will need a recent appraisal from you, along with an up to date mortgage statement. If it turns out that the amount of equity you have is too high—or if the costs of ownership (mortgage, taxes, utilities) are—it might be better for you to let the home go and make a fresh start.

In a consumer proposal situation, secured debts such as houses and cars are not included in your proposal. This means that keeping your home may be as simple as continuing to make your mortgage payments. The equity you have in your home will be taken into consideration in determining what you offer your creditors.  Once again, however, if the costs of ownership are too high, you may need to reconsider.

To determine what your best options are for your situation, call us today to schedule a free, no obligation consultation: in Ottawa call 613-237-5555; out of town, call toll-free 1-800-517-9926 or book online.

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