The past few weeks I’ve been touching upon bad credit and alittle about bankruptcy, this week I will touch upon homeownership andbankruptcy/consumer proposals from a mortgage perspective. On an annual basis, approximately100,000 Canadians go bankrupt or file for a consumer proposal. [1] If you are a homeowner and your realizingyour debt load is getting overwhelming and you’re using credit to pay debtsthen it might be a good idea to check out your options. I would say that some waitway too long to address the problem or simply don’t know where to turn for help.In most cases, your options are a debt consolidation loan, refinance your home,work with a credit counsellor, file for bankruptcy or file for a consumerproposal.
Before making a decision it’s not a bad idea to go step-by-step. A mortgage specialist can help you weighbetween a debt consolidation loan and/or refinancing your home. The goal herewould be to consolidate your debt load into one lower mortgage payment and/orone bank loan that encompasses all your debts. If your debt load is too largeand you owe more than equity available then I would suggest speaking to acredit counsellor or bankruptcy trustee. Credit counselors generally work for non-profits that genuinely can help you create a personal budgetand give you valuable money management advice. A bankruptcy trustee is licensedto review your options and should it get to that point advise you between aconsumer proposal or bankruptcy. Typically, if you have a lot of equity in yourhome then it could be seized and sold to repay your creditors. The seizure ofyour home depends on your specific circumstances.
To put things into better perspective, in 2010 there were 7288Quebecers that received foreclosure notices and of that amount 42% had theirproperties seized. Upon closer inspection only 175 Montrealers in 2010 losttheir homes.[2] Atface value looks that sounds pretty good, especially compared to the UnitedStates however keep in mind we are at record lows with regards to interestrates. Many of these mortgages will also be coming up for renewal where the newfuture rates could be much higher Also, if you have received a 60 day noticefor your home there are options but very individual case specific.
I hope that you feel more at ease knowing that if you havebad credit, considering a bankruptcy or consumer proposal there are optionsavailable to you. There are also options available if you presently own yourhome and have filed for a consumer proposal within your mortgage term. If youhave any specific questions please feel free to contact me.
https://www.ic.gc.ca/eic/site/bsf-osb.nsf/eng/h_br01011.html
[2]Lamey, Mary “Quebec foreclosure rates dropping” Montreal Gazette, 12 May 2011.
http://www.montrealgazette.com/business/Quebec+foreclosure+rates+dropping/4772026/story.html
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