Can We Keep Our House If We File A Consumer Proposal?

Question: My husband & I own a house jointly. The house is worth $570,000 and the mortgage  is $420,00. While my husband and I each  have $75,000 equity, I owe $69,000 and my husband owes $63,000 in credit card debt. We make a combined income of $80,000.  If we file a consumer proposal can we keep our house and the equity in the house? Can we file a consumer proposal separately.

Keep Your Home in A Consumer Proposal

Yes, it is possible to file a consumer proposal separately.  To file a consumer proposal, you must be insolvent, meaning your debts are greater than your assets.  If your house is worth $570,000 and the mortgage is $420,000, you are correct that the equity is $150,000, or $75,000 for each of you and your husband.  If your debts are less than $75,000 each, you are not technically insolvent.

However, with the decline in the real estate market in Canada this year, it is possible that your house is worth less than you think. Plus real estate commissions, legal costs and other fees will reduce your projected equity value. We recommend the following approach.

First, contact a real estate agent and have them give you a written appraisal, or comparative market assessment of your home, so that you have a better idea of what it will sell for.

Then, contact a licensed bankruptcy trustee and consumer proposal administrator to review your options.   They will want to review the appraisal, and get proof from the bank about the exact amount owing on the mortgage.  With this information they will be able to calculate the exact amount of equity in your house.

Then, research your options.  Many people ask the question “Will I lose my house because of my money problems?“.   Your trustee will be able to give you a good answer to this question.

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