What Happens To My House In A Bankruptcy

In many cases, you have a choice as to whether you want to (a) keep your house or (b) give it up and be released from the mortgage.  You've said that there isn't much equity.  If: - The house is your principal residence; AND if  - The house is in Metro Vancouver (formerly GVRD) or Capital regions, Then your equity isexempt (protected from creditors) for up to $12,000.  In other parts of BC, your equity is exempt up to $9,000. So, if your equity is within these limits, here are your choices: If you're mortgage payments are up to date and if you want to keep your house, most mortgage lenders are willing to let you do so.  Once you resume mortgage payments after a bankruptcy, you are considered to have accepted full responsibility for the mortgage and the bankruptcy would not protect you if you later defaulted and ended up in foreclosure. If you feel that the mortgage is too high for you to manage and you want to give up the house, a bankruptcy allows you to do that.  As soon as the bankrkuptcy occurs, you would cease making your mortgage payments and the mortgage lender would foreclose and sell the house.  If there is a shortfall on the sale (i.e., if the mortgage lender doesn't recover enough to pay the mortgage in full) the bankruptcy protects you - the mortgage lender can make a claim in the bankruptcy for the shortfall amount, but they cannot try to collect it from you.  On the other hand, if there is money left after the mortgage and foreclosure costs are paid, that money goes to you up to the exemption limit ($12,000 or $9,000 - see above).  Anything above that would go into the bankrutpcy for your creditors. If your equity is more than the exemption limit, you need to talk to a trustee to get advice on what would happen.  If you're able to pay into your bankruptcy the amount that exceeds the exemption limit (for example, if you're in Metro Vancouver and have equity of $15,000, you're above the exemption limit by $3,000), then you can usually keep your house if that's what you want. If you have a lot of equity, let's say $60,000, the trustee will have to sell the house, pay the mortgage and other costs, you get the next $12,000 or $9,000 (depending on the location of the house) and the rest of the money goes to your creditors in the bankruptcy. That's some general information.  If you'd like to get information specific to your situation, feel free to give me a call. Judy A. Scott Vancouver - Port Moody - Abbotsford 604-949-2113 -- 866-568-1335