house « Bankruptcy Ontario: Free Information about Bankruptcy in Ontario

House and bankruptcy in ontario

Monday, October 3rd, 2011

Question: When I filed Bankruptcy in Ontario I did not include my house thinking i can keep it It looks now that I am having problems making payments each month. I just started the bankruptcy 5 months ago .Is there any any way I can re-open my bankruptcy and in include my house in it.

If not then is it possible to put the house up for sale and what ever is the profit, if any can go to my bankruptcy . Since it was not included in the bankruptcy at all i am not sure if i will be allowed to sell.

Answer: I’ll start my answer by clarifying your question.

A mortgage is a secured debt, and bankruptcy includes unsecured debts, so at the start of your bankruptcy you chose to continue making payments on your mortgage, so you could keep your house. It’s not that your house wasn’t included in your bankruptcy; it’s simply that you chose to continue making your mortgage payments.

If you were to stop making your mortgage payments now, the bank would eventually foreclose on your house and sell it. In that case you would be responsible for the resulting shortfall, if any, since the shortfall is a debt that came into being after you filed for bankruptcy.

Alternatively, you could sell the house yourself. If you sell the house for more than is owing on the mortgage, including selling costs, the resulting equity would go to your trustee for distribution to your creditors. If there is a shortfall, you would be responsible for the shortfall.

Without knowing the exact numbers in your case, we would strongly recommend that you meet with your trustee to review the numbers, and to fully evaluate your options.

Tags: house
Posted in bankruptcy, bankruptcy Ontario, bankruptcy trustee, house | 1 Comment »

House Equity in Bankruptcy in Ontario

Monday, September 20th, 2010

Question: I am in the process of filing bankruptcy in Ontario but have not signed the papers yet. There is $8000 equity in my house however there is still 4 years to go on the mortgage that if I sold now I would owe more than I make in closing costs and the rate differential however the trustees say they want us to pay the $8000 which is really not possible, not even in payments. We make just under what is determined for our family size and there is no extra monies. If either of us did get another position to help cover that cost it would only increase the length of our bankruptsy. I would like to go through with the bankruptcy but can’t afford to agree to this extra expense? Consumer proposal would not help. Don’t know what to do.

Answer: You have three choices:

First, you could get a second opinion from a different Ontario bankruptcy trustee. It appears that if the trustee was to seize your house and sell it, after paying disposition costs and the penalty to break the mortgage there may not be any equity. Alternatively, the trustee could apply to court for an extension to your bankruptcy to allow you to pay the equity over a longer period of time.

Second, you could sell the house. If there truly was no equity, you would have proof, and your bankruptcy would end in the normal period of time. Obviously that’s a very drastic solution.

Third, you could consider a consumer proposal. If there would be no surplus income in your bankruptcy, the consumer proposal could offer to pay the equity in your house over an extended period of time to make the payment affordable. Again, you should consult a different Ontario bankruptcy trustee for a second opinion.

Tags: bankruptcy, home equity, house
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Mortgage, Car Payments and Consumer Proposal

Thursday, September 16th, 2010

Question: I was just wondering, if we have a mortgage on a house and we are making car payments through a bank can we still qualify for a consumer proposal without losing either of those things?

Answer: Yes, you can file a consumer proposal or a bankruptcy in Ontario, and continue to make the payments on your mortgage and your car, provided those payments are up to date when you file.

Whether or not you should continue to make the payments is up to you. If your house is worth significantly less than what is owing on the mortgage, it may be prudent to surrender the house and include it in your proposal. That is a decision you will make in consultation with your consumer proposal administrator.

Tags: car, consumer proposal, house
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Creditors meeting

Thursday, July 22nd, 2010

Question: I have $15,000 equity in my home and have asked my trustee to request a meeting of creditors to attempt to settle. I am a single mom with 3 children and i do not have the money to pay 15,000. I may be able to come up with $4,000.00 and can only afford approx. $100-$200/month. Do the creditors have to show up and agree to my proposal? Does this happen very often?

Answer: It is very unusual for creditors to attend a creditor’s meeting. Most creditors are big banks and credit card companies, and they don’t have the resources to be sending staff to creditor’s meetings. Even if they did show up, they would presumably request that you pay the $15,000, or surrender the house.

Your question is not clear: did you file bankruptcy, or did you file a consumer proposal? If you filed a consumer proposal, it is possible for the creditors to negotiate a settlement with you. If you have $15,000 in equity in your house it is unlikely that they would agree to $4,000. However, they may agree to an initial payment of $4,000, and then further payments of $200 per month for 60 months; that would be total payments of $16,000, which is more than they would get in a bankruptcy, so that may be acceptable to them.

We strongly recommend that you discuss this with your trustee, since it is your trustee’s job to fully inform you of all possible outcomes, so that you understand the different options.

Tags: home equity, house
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Principal Residence and Bankruptcy in Ontario

Monday, July 12th, 2010

Question: My wife bought the house I live in 20 years ago- she has paid all the bills and mortgage etc – I am the one who may have to go bankrupt due only to Tax owing – I do not have any assets -is the house at risk?

Answer: Your wife’s house is not at risk if you declare bankruptcy in Ontario. Since she has always owned the house, and she has always paid for it, and since you are not separated from her, it’s her house.

More information can be found in this article on what happens to a house in bankruptcy, or consult a lawyer or a bankruptcy trustee to review your situation to determine if there are any other factors that would influence your decision to file bankruptcy.

Tags: bankruptcy Ontario, house
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Bankruptcy in Ontario: What Happens to My House and Car?

Thursday, March 11th, 2010

Question: Hi, my boyfriend is heavily in debt and we would like to seek some advise. He has $70,000 in credit card and line of credit debt and is having a hard time coping up with the payments since he only works part time. The only assets he has is his car that he has paid off a long time ago and the house his parents bought which is named after him, his sister and brother. If he decides to file for bankruptcy in Ontario what will happen to the house that is house and also to his car? I hope you can help us. Thank you very much!

Answer: If you file bankruptcy in Ontario, you are required to either surrender your house to the trustee, or pay to the trustee the equity in your house. Equity is the value of the house (the difference between the value of the house, and the amount owing on the mortgage and other charges). If there is no equity, you could keep your house (provided you keep the mortgage in good standing). In your brother’s case, if the house is owned jointly by him, his sister, and his brother, he would only be required to pay his share of the equity (presumably one third).

He should get an appraisal on the house, and confirm the balance owing on the mortgage, and then meet with a trustee to discuss his options.

For the car, if there are no loans against it, you can keep a car worth up to $5,650 if you go bankrupt. Since his car is old, it is probably not worth more than that amount, although again he can have it appraised to be sure.

More information can be found in this article on what happens to your house if you file bankruptcy in Ontario, and what happens to my car if I file bankruptcy in Ontario.

For a review of his exact situation, he should consult an Ontario bankruptcy trustee for a no charge initial consultation.

Tags: bankruptcy Ontario, bankruptcy trustee, car, house
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