Can I surrender my home without major damage to my credit?

Question: I am no longer able to keep up with costs of maintaining my home - due to many factors. I am one month behind on a mortgage payment and was told by my real estate agent that he does not take these kind of sales because the broker is afraid they will not get their money if there is a lot owing to the mortgage company. Can I surrender my home to the mortgage company without claiming bankruptcy in Ontario and/or damaging (further) my credit rating?

Answer: The answer depends on the value of your home. If you surrender the house to the mortgage company and stop making the mortgage payments, the mortgage company will eventually foreclose on your home and sell it. If they get enough money to completely pay off the mortgage and associated costs, you won't owe them any money, so there won't be any long term damage to your credit rating.

However, if there is a shortfall on the mortgage when the house sells, your credit rating may be negatively impacted if you are not able to pay the shortfall.

If you believe you will lose your house, it is often better, if possible, to sell it yourself to maximize the proceeds. If there is a shortfall that you can't pay, bankruptcy or a consumer proposal may be options to deal with the debt.

Labels: bankruptcy Ontario, consumer proposal