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You don't automatically lose your house when you file for bankruptcy
Learn More
- #1 Alternative to bankruptcy
- Consumer Proposal Vs Bankruptcy
- Calculate your debt repayment options
- Frequently Asked Questions
- Is it in your best interest to keep your house?
It is important to weigh all your options to find the right solution to managing your house in a bankruptcy.
The equity you have accumulated in your house, and your cash flow are key factors in making the decision.
To keep your home when filing for bankruptcy, you must be able to pay all of your home's equity to your bankruptcy trustee, before the bankruptcy is complete.
If you find you have accumulated more equity than you can pay, there are other options that allow you to keep your home such as filing a consumer proposal. Weigh all our debt management options carefully before deciding.
How to calculate home equity:
The equity in your house is simply the difference between what your house is worth and what you still owe on it.
To roughly calculate your equity, you will need to take the current market value of your home and deduct the following:
- Total amount remaining on your mortgage
- The costs of selling your home (real estate fees, legal fees, mortgage penalties etc)
- All back property taxes
- Any other liens or charges against your house
The amount remaining is generally what a trustee considers to be your house equity.
If your house has no equity, or negative equity, the trustee will not take your house when you go bankrupt.
Sample Calculation:
The following is an example of a trustee's home equity calculation.
In fact, it might be more manageable to keep your home when you file bankruptcy, because you will no longer have to pay all of your other debts each month (claiming bankruptcy wipes them out).
Is it in your best interest to keep your home?
Since claiming bankruptcy allows you a fresh financial start, it is an ideal opportunity to review your entire life situation and consider where you want to be in the long term.
Here are some other factors to consider when deciding if keeping your home is really in your best interest:
- Are you physically able to keep up with the maintenance of your home?
- Are you prepared for any major/minor repairs?
- Is your house in ill repair?
- Does your home still suit your needs?
- Do you want to stay there?
Cash Flow:
If you decide to keep your house, you must ensure that you can continue to make all required payments on your mortgage, property taxes, and for house repairs.
Many people get into financial trouble because they can't afford their house payments. If that's the case, it may be prudent to surrender your house to the bank and find a place to rent. In the long run, you may save a lot of money.
Contact us and set up a free initial consultation . We can explain your rights and options you have. We can help you make a workable financial plan.
