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  Home > Bankruptcy Resources > Homes during Bankruptcy  

 

Homes during Bankruptcy

 
 

Any property you have a mortgage on is considered a secured asset. This means that the lender has the right to seize your property to reclaim the value of their loan to you. If you have been paying your mortgage regularly, and an assessment of your finances during and after bankruptcy show that you can continue to do so, it is likely that your lender will choose not to foreclose on your home.

During bankruptcy you will be expected to divest yourself of assets, including equity built up in your home (some provinces allow you to retain substantial equity, others none). To release the equity in your home, you can try to take a second mortgage or perhaps borrow the money from friends or family. The equity built up in your home is determined by subtracting the remaining mortgage principal and the property taxes from the market value of your property.

If you live in a province that does not allow you to retain any home equity, it may ultimately be wiser to surrender your home to the trustee and find less expensive rental housing (typically, rental housing provides savings on utilities, insurance, taxes and even transportation costs, as you can choose to move close enough to your work location that car ownership with its attendant costs is no longer necessary).

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