Can I Declare Bankruptcy and Keep My House?

Declaring bankruptcy is often seen as a last resort for people overwhelmed by debts. It can be a daunting prospect, fraught with uncertainty and fear. One of the most common concerns is the possibility of losing one’s home. So, the question arises, “Can I declare bankruptcy and keep my house?” This article aims to dispel myths and provide clear answers to this question.

Understanding the Impact of Bankruptcy on Home Ownership

Almost 25% of individuals who declare bankruptcy in Canada are homeowners. The fear of losing their home can deter many from considering bankruptcy as a viable option for debt relief. But, contrary to popular belief, declaring bankruptcy doesn’t necessarily mean losing your home.

Equity and Bankruptcy

Equity, the difference between the market value of your home and what you owe on your mortgage, plays a significant role in determining whether you can keep your house during bankruptcy.

If your home has substantial equity, it might be considered an asset that needs to be realized to pay off your creditors. However, each Canadian province has its own set of bankruptcy exemptions that may allow you to keep some or all of your home equity.

For instance, check out the bankruptcy exemptions in Ontario. Even if your home equity exceeds the provincial exemption limit, you still have options. You could pay your bankruptcy trustee the equivalent of your home’s non-exempt equity to keep your property.

Maintaining Your Mortgage

A common misconception about bankruptcy is that it automatically results in the loss of your mortgage. However, bankruptcy primarily deals with unsecured debts, i.e., debts not tied to a specific asset like a car or house. As long as you’re current on your mortgage payments, declaring bankruptcy shouldn’t affect your home ownership.

Considering a Consumer Proposal: An Alternative to Bankruptcy

If you have significant equity in your home and can’t afford to repay it during bankruptcy, you might want to consider a consumer proposal. It’s a legal agreement between you and your creditors that allows you to retain your assets while paying off your debts over a longer period, usually five years.

A consumer proposal can often be a better choice than bankruptcy for homeowners with significant equity. Your creditors are likely to agree to a consumer proposal because they’d usually receive more than in a bankruptcy. Plus, it enables you to keep your house and avoid bankruptcy.

Selling Your Home: A Last Resort

Selling your home is usually the last resort when it comes to dealing with overwhelming debt. It should only be considered if you’re unable to keep up with your mortgage payments. In this scenario, the equity from your property sale would be used to repay your creditors.

A Comprehensive Approach to Bankruptcy and Home Ownership

While the prospect of declaring bankruptcy can be daunting, especially for homeowners, it’s essential to remember that there are many routes to debt relief. The question, “Can I declare bankruptcy and keep my house?“, does not have a one-size-fits-all answer. It depends on many factors, including your home equity, your province’s bankruptcy exemptions, and your ability to keep up with your mortgage payments.

If you’re considering bankruptcy, it’s best to consult with a reputable bankruptcy trustee or a debt relief expert to understand your options better. They can guide you through the process and help you make informed decisions that best suit your financial circumstances.


Declaring bankruptcy doesn’t necessarily mean losing your home. Depending on your circumstance, you might be able to keep your house and still get the debt relief that you need. Remember, every situation is unique, and what works for one person may not work for another. Therefore, it’s crucial to seek professional advice to ensure you make the best decision for your future.

If you’re a homeowner struggling with debt, know that keeping your house is a very realistic possibility. There are many debt relief options available to you. The sooner you reach out for help, the sooner you can work on keeping your home and assets safe from creditors.

Schedule a free consultation with a debt relief professional to learn more about your options. Remember, you owe it to yourself to explore all possibilities before making a decision.

Remember, asking “Can I declare bankruptcy and keep my house?” is a step in the right direction. It means you’re ready to face your debt head-on and seek the help you need. And with the right advice and support, you can navigate this challenging time and come out stronger on the other side.

You owe it to yourself to be debt-free.

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