I spoke to a young woman recently that has gone through a very tough time in the past few years. She and her (now) ex spouse could not keep up the payments on their home and lost it under power of sale by the mortgagee. The house was sold at a substantial loss and as the mortgage was guaranteed by Canada Mortgage and Housing Corporation the debt now rests with them. She also has a few credit card debts and other miscellaneous debts.
She and her spouse separated and she is now struggling to live on social assistance while raising a young family.
Creditors would have a hard time trying to collect debts from her as they really have no means of collection under her current circumstances; she doesn’t have wages, so they can’t get a wage garnishment.
However, she received notice from CMHC that they will start to redirect any income tax refunds or GST credits against the shortfall from the sale of the house. As a government agency they have the ability to request that Canada Revenue Agency send these funds to them.
The debt is large and her tax refunds/GST credits are small so it could take years for this debt to be repaid, especially as interest is accumulating at an alarming rate.
She feels that she needs a fresh start after all the stress she has been through in the past few years and would really like to be able to raise her family without this old problem hanging over her head. I invited her to have a free consultation with one of our professionals to discuss her options. Filing bankruptcy may be the right solution for her and would give her some much needed peace of mind.