One of the most common questions I hear from clients is: “Will I lose my home if I file for bankruptcy?” The short answer is a resounding: NO, you will not lose your home during a bankruptcy.
There is a lot of misinformation floating around about what happens to your house if you file for bankruptcy. I have been involved with helping people deal with financial problems through filing a Consumer Proposal or a Bankruptcy for almost 20 years. In thinking back to the thousands of people I have helped to get out of debt, I cannot recall a single situation where a person lost their house because they filed for bankruptcy.
You can keep your house in a bankruptcy by making arrangements with your Insolvency Trustee to pay for the equity. You do not need to pay for the full value of the house, just the equity (i.e. the value of the house, less the mortgage). Most Insolvency Trustees will work out an affordable payment plan, that will allow you to pay for the equity over a period of time. This will ensure you are able to keep your house during your Bankruptcy.
Sometimes, people lose their houses because of unfortunate situations in their lives, that puts them in a position where they cannot afford to make their mortgage payments. For those unfortunate few, the mortgage holder may eventually seize the house and sell it under Power of Sale proceedings. An Ontario bankruptcy cannot prevent the mortgage holder from taking the house, but it does eliminate the remaining debt if the mortgage holder sells the house.
Let me be clear: The mortgage holder can only sell the house if you are behind in your mortgage payments. Filing a bankruptcy does not mean you automatically lose your house.
For anyone contemplating the filing of a bankruptcy, it could also be a way to walk away from a house that has become unaffordable to keep. As long as an individual is current with their mortgage payments, the decision to walk away from the house is theirs. If they find that they cannot afford the high mortgage payments, they can walk away from the house, and file for Bankruptcy. Any losses to the mortgage holder will be eliminated through their Bankruptcy.
To learn all about how a Bankruptcy can help you to eliminate your debt, schedule your free, no-obligation debt consultation. One of our Debt Relief Professionals will assess your situation and discuss all your options to get out of debt without having to lose your home, car, or other asserts.