You owned a house that went into foreclosure or a forced sale and your mortgage was insured by one of three Canadian Mortgage insurers: Canada Mortgage and Housing Corporation (CMHC), Genworth Canada or Canada Guarantee. The sale proceeds were not enough to pay the mortgage and you now have a CMHC judgement (or similar mortgage shortfall notice) to worry about. What should you do?
CMHC Debt Collection Alternatives
Whatever the reason for having to sell your home, whether due to a divorce or because you fell behind on your mortgage payments, finding out you now have a debt shortfall or that your shortfall has been sent to debt collection can be scary.
You likely received a letter in the mail from CMHC that you owe significant arrears from the forced sale of your house. It is basically a judgment against you. Unfortunately, because CMHC is part of the federal government, they have the power to seize your tax refunds through their federal garnishment powers until the debt is paid.
The good news is you do have option.
- Make payment arrangements: you could contact CMHC and attempt to negotiate payment arrangements. You could offer to start making monthly payments at an agreed upon amount over a period of time until the debt is repaid.
- Apply for a debt repayment loan: If you have good credit, you could get a loan and then use the money to repay CMHC.
- Debt settlement alternatives: If you have other debts, a consumer proposal may be a solution for you. If you have minimal income and no way to repay them, it may be necessary to declare bankruptcy in Canada.
Since each situation is unique, we recommend that you contact a professional, accredited debt advisor to review your options in more detail.