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Filing for bankruptcy is a serious decision that should not be taken lightly. However, if a person is struggling to make ends meet and is considering bankruptcy, then this step may be essential. But one question that most people ask is if someone files for bankruptcy, would that person be able to keep the house still?
In Canada, it is possible to keep the home when someone files for bankruptcy, but certain conditions must be met. First, a person must be up to date on mortgage payments. If that person is behind on payments, then it is important to catch up before one can file for bankruptcy.
Second, a person must have enough home equity to cover the bankruptcy. Equity is the portion of a person’s home that one owns outright, free and clear of any liens or mortgages. In most cases, a person must have at least $5,000 in equity to file for bankruptcy.
If a person meets these conditions, then filing for bankruptcy can be done as well as keeping a home. However, a person should be aware that bankruptcy will remain on that person’s credit report for seven years. This can make it difficult to obtain new credit or loans during that time.
If a person is considering bankruptcy, one should speak to a licensed insolvency trustee to discuss available options. They can help a person determine if bankruptcy is the right choice for a person and help a person through the process.
How to File a Bankruptcy in Canada
If a person decides to file for bankruptcy in Canada, there are a few things that need to be done in order to get the process started. First, one needs to complete a mandatory credit counseling session with a government-licensed credit counselor. This counseling session will help a person understand various options and what to expect from the bankruptcy process.
Once a person completes counseling, all of the necessary paperwork needs to be gathered. This includes the most recent tax return, a list of creditors, and a statement of assets and liabilities. Then, one will also need to pay a filing fee, which is currently $200 for individuals.
Once all of the paperwork is in order, a person can file for bankruptcy at a local bankruptcy court. Attending a hearing is mandatory, at which point a trustee will be appointed to oversee a person’s case. The trustee will work with a person to develop a repayment plan, which will be used to pay back the creditors.
Can a Person Still Keep the House after Filing Bankruptcy
Filing for bankruptcy doesn’t necessarily mean that someone will have to give up the house. In fact, it may be possible to keep the house after bankruptcy if a person takes the right steps and plan ahead.
The first thing to understand is that there are different types of bankruptcy, each with its own rules and regulations. Chapter 7 bankruptcy, for example, involves the liquidation of assets in order to pay off creditors. However, a person’s home may be exempt from liquidation if its value is less than the amount a person owes on the mortgage.
Chapter 13 bankruptcy, on the other hand, involves reorganizing the debt and making payments over a three- to five-year period. During this time, one may be able to keep the house as long as that person makes regular mortgage payments.
If someone is considering bankruptcy, it’s important to talk to an experienced bankruptcy attorney and debt consultants who can help understand the pros and cons of each type of bankruptcy and how it will impact someone’s ability to keep the home.
Conclusion
Filing for bankruptcy is a complicated process, but it doesn’t have to be overwhelming. In most cases, it is possible to file for bankruptcy and keep the house, but it depends on a number of factors. With the help of expert professionals, one can get through the process and start fresh. DebtHelpers.ca are debt consultants in Toronto, ON, who help Canadians in debt to find solutions to their financial problems. We offer a wide range of debt solutions and consulting services to help become debt free. If someone is struggling with debt, we can help a person find a solution that fits every unique situation. Let us get started on the road to financial freedom. Contact us today to get started!