Homes are a sensitive topic when considering your options in dealing with your debts. A number of factors must be taken into account. We have seen situations where the possibility of losing a home, the impact on children, children’s schools, how you are perceived in the community are all real concerns that must be addressed during the consultation period. At S. Funtig & Associates, over the decades of experience, we have seen these situations our debtors are facing. They are real and must be addressed especially when one spouse may not be insolvent and who may have an interest in the home.
During your consultation with a Licensed Insolvency Trustee (“LIT”) you will discuss a number of factors including budgetary considerations, ownership, mortgage, lien and tax liens registered against the home and what options you have both in terms of keeping the home and what options in dealing with your debts.
Here is the legal part, this blog is not designed, nor in the space available, can we set out all conditions, exceptions or possibilities. Once you read this blog, you should contact one of our offices near you or contact a local trustee near you for greater analysis and review of your particular circumstances. For ease of reading, we will try to create a series of short blogs written for ease of reading and avoiding lots of legal jargon.
As stated in a previous blog, your equity, the value of the home, less what you owe on the home, is what is available to provide some payment to your creditors. In Ontario, you are also allowed to keep $10,000 of equity only in a principal residence by the Executions Act. A LIT can explain the options not only on how to address settling the equity in a home but also options other than bankruptcy, like a proposal or consumer proposal or a refinancing of the equity.
Often we encounter situations where the person during the consultation is concerned that filing for bankruptcy or making a proposal to their creditors will cause them to lose their home. While this is a complicated area which a LIT can assist, generally, the powers of a mortgagee are found within the mortgage documents. Typically as long as the mortgage payments and tax payments are up to date, the mortgagee will not interfere if the person should file for bankruptcy or make a proposal.
Sometimes moving out of a home as part of an insolvency situation creates more problems, financial, personal and social problems than staying in the home. Rent payments, especially rent deposits may be difficult to come up with and rent may be more than mortgage payments. People may wish to avoid the stigma of moving out of the area. Working with your LIT, you may be able to review and reduce some of your living costs and work out a plan to pay the equity in the home over time thereby avoiding moving out of your home.
We have experienced a number of situations regarding the principal residence. There are solutions, often ones that individuals don’t know exist. Come in for a no-obligation free consultation to understand what are your rights, obligations, and options. Often a discussion can ease your concerns and provide a family with the opportunity to have an open discussion about the situation they find themselves in.