What Happens When You Can’t

Pay Your Mortgage?

www.hoyes.com

Can You Keep Your House?

Table of ContentsCan I Afford to Keep My House?

What Are My Options?

Should You Sell your Home?

Should You Refinance?

What Happens if I File for Bankruptcy?

What Happens in a Consumer Proposal?

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Your house is your largest asset. It's your home, so you always pay your mortgage, but you may be falling behind on your credit cards and other bills, and you worry that you may fall behind on your mortgage payments too.

You worry that you may lose your home.

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Can I Afford to Keep My House?

The first step is to ask yourself a tough question:

“Can I afford to keep my house?”

This is a very difficult question to answer, because it’s not just your house, it’s your home. Obviously you want to do everything in your power to keep your home, however, it is very important that you do an honest assessment of your situation.

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Can I Afford to Keep My House?

Housing expenses include more than just mortgage payments. You also have to be able to pay property taxes, condo fees, maintenance costs, insurance, repairs and more.

Ideally, you should be spending a third or less of your total income on your housing costs.

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Can I Afford to Keep My House?

Ask yourself what is causing your financial problems. Your home or is it other debts?

Almost 1 in 3 debtors who file for insolvency owns a home with a mortgage.

The average insolvent homeowner carries a mortgage equal to 92% of the value of their home.

So, what happens if you own a house and have more debt than you can handle? You have a number of options.

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What Are My Options

If you have more home than you can afford, you might opt to sell your home when you’re in financial trouble.

If you have negative equity in your home and other debts, the unpaid balance and those other debts can be dealt with in a bankruptcy or consumer proposal.

If you have positive equity in your home, you can use this equity to repay your unsecured debts and rent or buy more affordable housing.

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Should You Sell Your Home?

Ask yourself: Will this option solve your cash flow problems and deal with all your other debts?

If you have positive equity in your home and have other unsecured debts another option is to get a debt consolidation loan secured by the equity in your home.

A second mortgage comes with risks:

• Higher interest costs• Default means you lose your

home

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Should You Refinance?

The key again is Will A Second Mortgage Clean Up All Your Debts?

Bankruptcy can help you eliminate your unsecured debt payments allowing you to keep up with your mortgage payments.

If you don’t have any equity in your house when you file for bankruptcy, you can choose to keep your house, provided you keep your mortgage, property taxes and all other house expenses up to date.

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What Happens if I File for Bankruptcy?

You do not have to sell your house simply because you filed for bankruptcy.

When you file for bankruptcy in Ontario your creditors are legally entitled to the ‘value’ of equity you have in your home.

If you have equity in your home and want to keep your house and still file for bankruptcy, you can arrange to pay the equivalent to the net equity value (after estimated selling costs) to your trustee.

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What Happens if I File for Bankruptcy?

Additional Information: http://www.hoyes.com/personal-bankruptcy/house-and-car-bankruptcy/

For many, a consumer proposal is a good bankruptcy alternative.

In a consumer proposal, your proposal administrator will make a deal with your creditors based on the equity in your house, your income and your ability to make a monthly payment.

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What Happens in a Consumer Proposal?

Additional Information:http://www.hoyes.com/consumer-proposals/keep-assets-consumer-proposal/

In order to get your creditors to accept your proposal, you must offer them more than they would expect to get in a bankruptcy.

If they would expect to get $25,000 from your house in a bankruptcy, your proposal would need to be more than $25,000. For example, you could offer to settle your debts for $30,000 so they will consider the proposal.

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What Happens in a Consumer Proposal?

Your creditors will look at all factors including your income as well as any other assets you own.

Your proposal payments can be made in a lump sum or paid over a period of up to 5 years.

The advantages of a consumer proposal are:• You keep your home• Your payments are significantly

reduced• You can now afford your monthly

mortgage payments

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What Happens in a Consumer Proposal?

Not sure which option to choose?

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We Can HelpTalk to us about your options.