Homes and Bankruptcy

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One of the most common question homeowners in Windsor, Ontario ask is “will I lose my house if I file for bankruptcy”?

The answer is not a simple yes or no. The trustee will look at how much equity is in the home (if you sold the home, how much money would you make after paying all of the selling costs). If there is equity, that equity is considered an asset and the bankrupt person must pay that equity to the trustee. However, if there isn’t any equity, there isn’t an asset to be paid to the trustee. As long as you are in good standing with your mortgage and remain current, the mortgagor will normally allow you to keep the house. This is a decision the mortgagor makes and it is best to confirm with them directly that they will let you keep the house. Bankruptcy does not stop the mortgagor from taking the house back (known as foreclosuring or power of sale) when the debtor is behind in his or her mortgage.

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