Foreclosure vs Mortgage Bankruptcy in Canada

There are differences between how mortgage foreclosure works in the bankruptcy process in Canada versus the States. In Canada, just because you go bankrupt, doesn’t mean that you lose your house or that you end up in foreclosure. Bankruptcy also does not stop the foreclosure process because a mortgage is a secured debt. Bankruptcy deals with unsecured debts. 

Mortgage Foreclosure - Pay Your Mortgage to Avoid Your Lender Selling Your Home to Get Money Back

Foreclosure is what happens when you are not able to pay your mortgage and the lender takes over owning your home. The lender then sells your home to pay off what you owe them.

Depending on the outcome of the sale and your overall situation, you may be required to pay any amount that is short, if the home is sold for less than what you owed.

Avoid Bankruptcy Foreclosure - Pay Monthly Bills for Secured Debts Like Mortgages

Bankruptcy eliminates your unsecured debts, so a debt like your mortgage, which is a secured debt, is not included in your bankruptcy in Canada. If you are having problems paying your mortgage, after you miss 2 payments, your lender will start contacting you and requesting that you catch up those missed payments immediately. If you miss a third payment or are unable to catch up and stay caught up, the lender will start the foreclosure process.

The Mortgage Foreclosure Process and Timeline - Save Funds and Prepare to Move on Short Notice

The foreclosure process usually takes a timeline of about 6 – 10 months to complete. During this time, you will likely not make any further mortgage payments. You are usually able to remain living in the home while it is for sale. If you do choose to stay in the home during this time, save funds towards a rental deposit elsewhere, and prepare to move on short notice.

Common Questions About Bankruptcy Foreclosure

A common question about foreclosure vs mortgage bankruptcy is how the process works. Many people wonder if they'll lose their home or not, what rights their mortgage lender has, or if getting a loan will help them. Some of your questions might be answered in the information above.

In Canada, when you declare bankruptcy, your mortgage isn't automatically in foreclosure. Your mortgage is a secured debt, so it isn't included in your bankruptcy. The rules in each province are a little different, so your trustee will explain what happens to your home and your mortgage if you declare bankruptcy, and how declaring bankruptcy can affect foreclosure. 

Bankruptcy Mortgage and Foreclosure - Contact Us for Help About What to Do

If you are having trouble paying your mortgage and you are worried that you might be facing foreclosure, contact us for help right away. You will have more options available to you if you ask for help sooner than later. Sometimes once you deal with debts and your other bills, you are able to catch up, resume regular mortgage payments and stay in your home. You can get more information about bankruptcy and avoiding mortgage foreclosure by calling us at 1-888-527-8999, emailing us or chatting with us online right now.

 

Related article:

Get Debt Relief from Your Mortgage | How to Avoid Foreclosure in Canada