How Do I Get Out Of Debt Without Losing My Home 

How Do I Get Out Of Debt Without Losing My Home 

Keep Your Home and Get Out of Debt

Most people who are struggling with high levels of debt want to get out.

They hate the position they have found themselves in and are searching for a way to escape.

However, they don’t want to be left with nothing at the end of the process and they certainly don’t want to lose their homes.

This is particularly true for people with families because they need to provide their children with some level of continued stability.

If you are filing for bankruptcy then it is possible to keep your home.

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However, it does depend on a few factors.

First, the exemption laws based on home equity state that you can not lose your home if the equity is $10,000 or lower.

If it’s higher than this, whether you keep your home will depend on:


  • The level of debt;
  • The types of debt;
  • Whether your mortgage is underwater.


Let’s explore some of these issues.

Are You Up To Date With Your Mortgage Payments?

The first step is always going to be ensuring that you are up to date with your mortgage payments.

If you are not on the right track here, then you are far more likely to lose your home.

Remember, regardless of whether you choose to file for bankruptcy or seek a consumer proposal, neither will impact your mortgage as this is a secured debt.

That’s why you need to make sure that you are catching up on payments before you file.

Now, you need to explore your remaining level of debt and think about the best ways to deal with it so that you do get to keep your home.

What Can You Afford?

Once you are up to date with your mortgage payments, you should then be exploring the debt that you have left.

You need to work out how much you can pay off.

You might be able to afford to pay the debt off completely or you could need to look for ways that you can reduce the level of debt or interest rates.

In either case, you should be able to keep your home.

This will almost certainly be true if you seek:



Bankruptcy is a little more touch and go which is why it should always be a last resort even if you are struggling with debt.

Remember there are lots of alternatives that are worth considering here.

Can You Pay Back All The Debt?

Some people may be in a position where they will be able to pay back all the debt without much support.

This might be possible with a second mortgage or a secured line of credit.

You will need to speak to your lender as well as your bank about these options.

There are limits and they can only lend on 80% of the value of the property.

So it will depend on the level of equity that you have.

As well as using your home as collateral, you will also need to have a strong credit history to move forward here.

If you have debts in arrears then this could hurt you.

If you don’t have a strong credit rating or you don’t have the money in equity, then it’s possible to explore a debt management plan.

This could offer the full assistance that you need in some cases.

They will put a plan in place to ensure that you can repay your debts.

You will need to pay back all the debt that you have accumulated but the level of interest can be far more flexible which is useful for you.

What If You Can’t Pay Back All The Debt?

If you can’t pay back all the debt then you need to explore options to reduce the debt that allow you to keep the house.

As mentioned bankruptcy puts you in a more difficult situation because you would need a payment plan to pay for the equity with a particular period that matches your needs.

If you fail to do this, then the trustee will be forced to sell the home.

This is why a consumer proposal will often be the better choice here.

Particularly if you are determined to keep your home.

Similar to bankruptcy a proposal will be filed with a Licensed Insolvency Trustee.

The offer states that you agree to pay back a percentage of the debt that you owe.

There’s no responsibility or obligation for the trustee to sell your home.

Instead, you can negotiate how much you need to repay your creditors.

This must be at least slightly more than they would receive through bankruptcy or they are likely to reject the proposal.

As such, you will need to ‘buy out’ the equity through the proposal agreement.

The benefit here is that this can include a lot more than just credit card debt.

As well as this, in some cases, you might be able to pay back less than you actually owe.

So, you could find yourself in a stronger situation with this option.

Do be aware that regardless of what option you choose here it will hit your credit rating.

This is always going to be true if you’re not paying back the total debt that you owe.

That’s why it’s always worth exploring whether you can afford to pay back all the debt with the right plan in place.

If you can’t that’s when a consumer proposal could be the best choice.

We hope this helps you understand some of the best ways to avoid losing your home when you’re escaping debt.

If you need further support, we can help.

We provide expert assistance on the phone and through free evaluations to ensure that you get the relief you need.

Contact us today and let’s begin your road to recovery.

Canadian Bankruptcies

How to File for Bankruptcy
What is Bankruptcy?
Bankruptcy FAQs
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?

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