What Happens to my House in a Bankruptcy?
If you are filing for bankruptcy and you currently own a house your bankruptcy trustee will determine if you have any equity in your house. Generally equity is the amount of money you would get if you decided to sell your house, which would be calculated by looking at the appraised value and subtracting the mortgage that is left on it, property taxes and selling costs.
If you cannot keep up with the payments of your mortgage and other household expenses or you house ends up being worth less than what you currently owe on your mortgage, it might be a good idea to include your house in the bankruptcy, but to be 100% certain this is the right solution for you please contact a bankruptcy trustee and discuss all options available for you.
It is also important to make sure that the property taxes and utility payments are up to date. If they are also in arrears they could be added to the mortgage, which might also cause the lender to foreclose on your house.
You must also keep in mind that your mortgage payment is not the only thing that comes with owning a home there are also property taxes, utilities, condo fees, and maintenance costs that go with the mortgage payment. So instead of the $1,000 a month for the mortgage payment you might be paying closers to $2000 a month when all the other expenses are combined and added together.
Once the complete analysis is done you can decide if you still want to keep your house or if the best option and this time is to sell and rent somewhere for a while. If you decide to keep your house you must than discuss and arrange the re-payment terms with your trustee before you can file for bankruptcy. Some creditor(s) may not like the amount they are set to get and they may want you to pay more to them so it is important that you fully understand the whole process of filing for bankruptcy before hand.
If you have significant equity in your house, or if you are unable to come up with enough money to purchase the equity in your house, you might have another option which is to consider consumer proposal. In a consumer proposal you still have to pay the equity in your house, but the payments can be made for a longer period of time which would lower the monthly payments you are required to pay each month.
It is very important to contact a bankruptcy trustee before you decide that filing for bankruptcy is the right option for you and your family. Your house is the largest monthly expense and it is also the most important investment you will ever buy for you family so it is so important to understand everything that is required of you when you file for bankruptcy.
If you’re discharged from a Bankruptcy or Consumer Proposal, you’ve paid your dues, it’s time to let “Your Durham Region Mortgage Doctor” help you get approved for a mortgage and get the home you deserve! We’re here to help! Contact us now.
