If a mortgage deficiency judgment is the only debt which you cannot manage you might consider trying to negotiate a settlement with the insurer that will avoid bankruptcy.
If you have an insured mortgage and cannot make a mortgage payment and it is unlikely you will be able to catch up, or the lender has a judgment, here are some helpful contacts:
Claims Payment Centre 1.866.358.9999
Canada Guarantee (Formerly AIG)
Toll Free: 1.866.414.9109 ext. 7001
If you make an assignment into bankruptcy, your Licensed Insolvency Trustee will determine if there is equity in your residence.
Equity is defined as the difference between what the house is worth, and what is owed on the mortgage and other encumbrances (like outstanding property taxes). If there is equity in your residence you may be required to pay this equity to the Trustee. In Nova Scotia there is no exemption. You will not be able to keep the equity in your residence. We can discuss this and other exemptions when we first meet with you.
If there is equity, you may contribute the amount equal to the equity into your bankruptcy (perhaps by borrowing from family or getting a second mortgage - which is difficult if you are bankrupt), and the Trustee will allow you to keep your house. In most cases, the mortgage company will allow you to renew your mortgage after bankruptcy. The reason is simple: the bank would prefer to have you make the mortgage renewal and continue paying off both the principal amount and the interest for the next 25 years than to foreclose and risk losing all the future profit plus an additional amount of money by selling your house at a discounted foreclosure price.
You should check with your lender but in most cases, provided that mortgage payments are up to date, bankrupts are able to make a mortgage renewal after bankruptcy.
To speak to one of our professionals at Grant Thornton call us at 902-310-6060 for a free, no obligation, confidential consultation.
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