Financial difficulties can throw your life into chaos and uncertainty. Will I lose my house if I file for bankruptcy? This question is likely to haunt you if you’re considering bankruptcy. It’s a complex issue, but we’re here to help you understand it.
Bankruptcy and Home Ownership: Is It a Threat?
Ever wondered if bankruptcy could potentially jeopardize your home? Let’s start by answering some common queries.
Can Bankruptcy be Declared if I Own a House?
Yes, you can. However, you should be insolvent – meaning your debt exceeds your assets or you can’t sustain your debt payments. A Licensed Insolvency Trustee (LIT) will review your financial status, including your home, before you file for bankruptcy.
What Happens to My Home When I Declare Bankruptcy?
The equity in your home determines whether you can retain it post-bankruptcy. Equity is your property’s market value minus your outstanding mortgage and property taxes.
Can I Keep My Home After Filing for Bankruptcy?
If your home equity is small and your debts are substantially larger, you might keep your home if you maintain mortgage payments. To retain your home during bankruptcy, you must pay the LIT the equity in your home, minus any provincial exemptions.
Can I Lose My House if I File for Bankruptcy?
Yes, if your home equity is large and you can’t repay the non-exempt equity to your LIT, you may lose your home. In such cases, your house may be sold, and the proceeds used to repay your creditors.
How Will I Pay My Mortgage After Declaring Bankruptcy?
Bankruptcy clears most of your unsecured debts (like credit cards, payday loans, lines of credit), making it easier to pay your mortgage, property taxes, and utilities.
Alternatives to Bankruptcy
There are other ways to navigate financial difficulties without affecting your home. A consumer proposal is a formal debt relief option that allows you to retain your assets while reducing your unsecured debt.
Dealing with Debt: Don’t Let Fear Hold You Back
Filing for bankruptcy can seem like a daunting step. However, every situation is unique, and a Licensed Insolvency Trustee can help you determine if bankruptcy is the right solution for you.
The fear of losing your home should not prevent you from addressing your debt problems. A LIT can help you understand the debt relief options and exemptions available to you.
Further Queries? Book a Free Consultation
If you have more questions about bankruptcy and its impact on your home, consider booking a free consultation with a Licensed Insolvency Trustee. They can provide expert advice based on your unique circumstances.
Final Thoughts
Financial distress can bring uncertainty and fear. However, remember that every situation is unique, and there are ways to manage your debt without losing your home. A Licensed Insolvency Trustee can guide you through this process, helping you make informed decisions about your financial future.
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