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Benny Mendlowitz, Trustee |
 | A woman came into my office recently, overwhelmed by debt and the payments that are required to service her debt. She needed a solution and was considering bankruptcy, but was really worried about her house and her mortgage – would she lose it all? Or would she be able to hang onto her house and her mortgage if she decided to declare bankruptcy in Toronto? |
I explained to her what I think a lot of people forget – your mortgage company doesn’t want your house. They want your payments. If there is a chance that you can keep the house, your mortgage company will make that happen before deciding to foreclose and take back your house.
There are a few things, though, to keep in mind when declaring bankruptcy when you have a mortgage.
- Your mortgage company will only continue to do business with you if you keep up the payments. If you have been missing payments, you will already be in trouble with the mortgage company, and they may foreclose. If you have been able to keep up with your payments prior to your bankruptcy, chances are your mortgage company will let you continue to make payments while you are bankrupt and after your bankruptcy has ended.
- When considering bankruptcy, you need to think about how much equity you have in your house. If you have equity, you’ll need to either pay the trustee the amount, or your house will be sold in order to get that amount. The calculation for equity is more complicated than comparing how much you owe with how much your house is worth. You can come into the office for a free consultation, and I’ll help you figure out this number.
- Your ability to renew your mortgage will be intact after your bankruptcy. Your current mortgage-holder will generally renew automatically with no questions asked. They’re not concerned with the fact that you’ve been bankrupt – they’re concerned about your ability to make the payments. If you can keep them up, there usually is no trouble. If you try to shop around, though, your potential lenders will definitely be looking at your bankruptcy, so stick with the mortgage company that you’ve got. If for some reason your mortgage company refuses to renew, don’t panic. I can refer you to a mortgage broker that will help you find someone to renew with.
When you’re considering bankruptcy while living in Toronto , your mortgage will be taken into consideration, but if you’ve been on-time with your payments, and you want to keep your house, we can help you figure out a way to do so.
If you have a mortgage and are overwhelmed by your other debt, come in to talk to me. You can call me at 310-PLAN to set up a free consultation, or you can also e-mail me any questions you might have about your situation. Let me help you get peace of mind and keep your mortgage.
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