Archive for the ‘house’ Category

Question: Hi there,
I have been separated from my husband since August 2008, and divorced since December 2009.
I have left the matrimonial house, and as per our separation agreement, he is assuming full responsibility of it (mortgaged, taxes, bills, etc.) until it sells (it is currently on the market).
I received an email from him today stating that he cannot make the mortgage payments anymore and may claim bankruptcy in Ontario (he has other debts besides this).
My question is this….. what happens to the house if he files for bankruptcy? Does the bank take the house from us? Does the bank go after me for the mortgage payments (even though out legal separation papers state that he is fully responsible for it). Is there any way that his possible bankruptcy will affect me?
Thanks so much!!

Answer: If he stops making the mortgage payments, eventually the bank will take the house. They will sell it, and if there is a shortfall, they will pursue both him and you, if your name is on the mortgage. The bank doesn’t care about the fact that he agreed to make the mortgage payments; the separation agreement was between you and him, not you and the bank, so they are not bound by it. If he goes bankrupt, they only person they can pursue is you.

If he sells the house and gets enough money to pay off the bank, that’s great, there is nothing for them to pursue you for.

Filing bankruptcy alone will not make the bank take the house. Many people file bankruptcy and keep their house, provided they can continue to make the mortgage payments, and pay any equity into their bankruptcy estate for the benefit of their creditors. More information can be found on this article about What Happens to My House if I Declare Bankruptcy?

Question: I am out of work waiting for ei. My bills are getting to much to pay i owe about $6,000 credit card and loan. Me and my wife are separated and she is making the mortgage payments on the house but its still in both are names. How will this affect my chances for bankruptcy in Ontario and how will this affect her?

Answer: The answer depends on the value of your house, and the amount owing on the mortgage.

The difference between what the house is worth, and what’s owing on it (the mortgage) is your equity. Since you and your ex-wife jointly own the house, you are each entitled to half of the equity. If you go bankrupt, you are required to give the trustee your share of the equity. If your share of the equity is a small number, it’s probably not an issue. If it’s a big number, the only solution may be to sell the house.

The first step is to get an appraisal done on the house by a local real estate agent, and get confirmation from the bank as to the amount owing on the mortgage. An Ontario bankruptcy trustee can then provide you with more detailed information.

Another good source of information is this article on What Happens to My House if I go Bankrupt?

Question: What happens if I declare bankruptcy in Ontario and if my house is worth less than the mortgage ?

Answer: You have two choices.

First, you could surrender the house to the mortgage holder prior to going bankrupt. They would eventually sell the house, and the resulting shortfall would be included in your bankruptcy.

Or, you could keep the house, and keep making the mortgage payments. In most cases the mortgage company will allow you to keep the house. However, you need to decide if it makes sense to keep paying for a house that has negative equity.

For more information, here is an article on What Happens to My House in Bankruptcy?

Question: If my house is included in the assets of my bankruptcy, how long do I have before I must vacate?

Answer: It is not clear from your question whether or not you intend to keep your house or surrender it as a result of your bankruptcy. A detailed discussion of houses and bankruptcy can be found in this article on What happens to my house in Bankruptcy?

If your house is worth less than what is owing on your mortgage, and therefore you are surrendering your house to the mortgage company when you go bankrupt, when they will actually take the house will depend on how far in arrears you are now. If your payments are current, it will probably be many months before they complete the foreclosure and take your house. If they have already started foreclosure proceedings than you would have less time. Your trustee can review your situation and give you a more accurate estimate based on the facts of your case.