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result of default on unsecured credit

My friend ownes two houses with combined mortgages of $150 000. The properties are currently rented, and as a result of the current market downturn – are valued at $165 000 combined.

He has approximately 20 000 in rrsps (down from a value of 52 000 one year ago).

And has aproximately $60 000 in unsecured debt, built up from being laid off and unable to find work for 14 months.

If he defaults on the unsecured debt, and continues to pay his secured debt, what are the ramifications of that course of action?

Posted from: Ontario

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One Response to “result of default on unsecured credit”

Barton Goth – Goth & Company Inc. -Trustee in Bankruptcy said...

Initially the unsecured creditors will simply try to apply for pressure. Eventually the unsecured creditors will take your friend to court to obtain a judgment. Once they have this judgment they will be able to proceed with a garnishee of wages, seizure of bank accounts or other non-exempt property and register on the existing equity in the the two properties.