Separating and Bankruptcy

Question: My spouse and I are separating. If he goes bankrupt, will I lose the house? His name is still on the mortgage.

Answer: The answer depends on a number of factors.

First, in a bankruptcy, the bankrupt person will lose the house if it has equity. Equity is the difference between what the house is worth, and what's owing on the mortgage. If there is minimal equity, he would not lose the house, which means you would not lose the house. If there is equity, he would be required to pay his share of the equity to keep the house.

The next issue is the mortgage. If your spouse goes bankrupt, the bank may remove his name from the mortgage. The bank may only allow you to keep the mortgage if your income is sufficient to qualify for a mortgage on your own. This may not be an issue immediately, but it may be an issue when the mortgage is up for renewal.

You should consult a family law lawyer to advise you more fully on your options for keeping the house.

Labels: bankruptcy Ontario