One of the biggest concerns when people file for bankruptcy in Scarborough is whether they will lose some of their assets, especially their most valued asset -- their home. It is a very common fear for many Canadians and it is one of the causes why they delay facing their financial problems. They don’t want to face their fear and hesitate to make an appointment with a Licensed Insolvency Trustee because they are afraid of what they might hear.
The fact is that seeing a Trustee may probably give you the best chance of retaining your home. When you talk to a Trustee, and tell him that you are concerned that you could lose your home and that you don't want to, the very first thing he will do is evaluate your situation to see if you can, and should, keep your home in a bankruptcy.
He will ask personal questions about your financial circumstances and may request to see documents, such as statements, bills and proof of your income and assets to determine your debt situation and work out how much you can afford to pay towards your debts.
Contrary to one of the most common bankruptcy myths out there, you don’t automatically lose your home when you file for bankruptcy. The Trustee will first figure out:
- How much equity you have in your home
- Whether or not you can afford to keep up with your mortgage payments
Then, depending on whether or not you have equity, he will be able to advise you on:
- Whether bankruptcy would let you lose or keep your home
- What other options you can take if you choose to keep your home
Finding out if you have equity
Whether or not there is any equity in your house is one of the first things your Trustee will want to work out. This is a very necessary step because the amount of equity you have in your home will determine whether or not you will be able to keep your home.
The equity in your home corresponds to the amount of money you would get if you sold your house. It is what your home is worth on the current real estate market minus what you owe on it. This is determined by taking the market value of your house (based on real estate listings for similar homes as yours), and then subtracting the total amount of what you still owe, which includes your mortgage, property taxes, and selling costs.
New Ontario exemption which applies to home equity
In December 2015, a new change in Ontario bankruptcy exemptions was introduced that could help homeowners who file for bankruptcy keep their home. According to this new rule which applies only to your principal residence, if your home has equity of $10,000 or less, your trustee does not have the authority to seize and sell your house. It is considered to be an exempt asset and cannot be seized. If, however, the equity in the property exceeds $10,000, then there is no exemption.
This is why talking to a Licensed Insolvency Trustee must be your first step when you are thinking about finding the best debt solution. With this exemption protecting the equity in your home, you might still be able to file for bankruptcy in Scarborough and keep your home.
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