Will I Lose My House If I File For Bankruptcy In Canada?

Will I Lose My House If I File For Bankruptcy In Canada?

Facing Bankruptcy in Canada: Is My Home at Risk?

Undergoing bankruptcy in Canada can be a daunting experience, filled with uncertainties and apprehensions. One of the most nerve-racking concerns is the prospect of losing one’s home. If you’re contemplating this question – “Will I Lose My House If I File For Bankruptcy In Canada?” – this article aims to provide you with comprehensive insights.

Understanding Bankruptcy

The decision to file for bankruptcy is never taken lightly. It often comes about when other debt repayment strategies have been exhausted. In essence, bankruptcy is a legal procedure that offers relief to individuals overwhelmed by debt. It helps eliminate most, if not all, of your debts, but it can also mean parting with some of your assets.

Equity: The Key Factor

The fate of your house when filing for bankruptcy largely depends on the equity you have in your home. Equity is the difference between the value of your house and the outstanding mortgage amount. For instance, if your property is valued at $500,000 and your outstanding mortgage is $400,000, your equity is $100,000.

Minimal Home Equity Scenario

If the equity in your home is minimal, there’s a high chance that you could keep your home, even after declaring bankruptcy. This is because there’s hardly any profit for your creditors even if the house is sold, after considering selling expenses and property taxes. However, it’s crucial that you continue your mortgage payments without default.

Substantial Home Equity Scenario

If you’ve built up substantial equity in your home, there’s a higher risk of losing it. However, you may still have some options. If you can afford to buy out the equity, you can keep your home. But if you lack the funds, you might have to consider the alternatives.

Alternatives for Retaining Your Home

If you’re unable to buy out your equity, you can explore other options like filing a consumer proposal. A consumer proposal is an agreement with creditors where you agree to repay a fraction of what you owe them over a set time period. It can prevent loss of assets, including your house.

Impact on Mortgage Renewal

If you’re in the process of renewing your mortgage while going bankrupt, it can be a bit tricky. While some lenders might be hesitant to renew considering your financial state, others may continue if you’ve been consistent with your mortgage payments.

Foreclosure: Another Aspect to Consider

Foreclosure is a separate issue that happens when you default on your mortgage payments, regardless of whether you’ve declared bankruptcy. If you’re up-to-date on your mortgage payments, your lender cannot foreclose your home simply because you’ve declared bankruptcy.

Bankruptcy and its Impact on Mortgage

Even when you file for bankruptcy, you can continue with your mortgage, provided you meet the payment obligations. However, it’s crucial to understand that if you’re behind on your payments, your lender has the right to terminate the mortgage agreement.

Navigating Bankruptcy: Expert Tips

Bankruptcy can be a complex process, and it’s crucial to seek expert advice. It’s always a good idea to consult with a licensed insolvency trustee who can guide you through the process and help you explore your options.


While the fear of losing your home can make the thought of bankruptcy even more daunting, understanding the ins and outs of the process can help you make the best decision for your situation. Remember, every situation is unique, and what works for one person may not work for another. Always seek professional advice when considering bankruptcy.

Through this comprehensive guide, we hope to have addressed your concerns about the question, “Will I Lose My House If I File For Bankruptcy In Canada?” Remember, knowledge is power, and understanding your options will help you navigate this challenging time with confidence.

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