Family took out mortgage to help

November 23rd, 2009 by Questions

What happens if someone declares bankruptcy (lets say Jane) due to CRA debt and personal mortgage debt (over $550k). Jane has also been paying, for the past few years, for a mortgage that was taken out by her family. Family took out mortgage, several years ago, under their own names to help Jane. Verbal agreement was that Jane would be responsible for the montly payments. However, Jane is no longer capable of making these payments and is going into bankruptcy. Will the courts see the monthly payments, which were made to cover this mortgage, as income for the family? And will they ask for the total amount back to pay for CRA & personal mortgage debt?

Posted from: British Columbia


One Response to “Family took out mortgage to help”

, Barton Goth - Goth & Company Inc. -Trustee in Bankruptcy said:

As long as the monthly amount that was paid each month was reasonable (i.e. the equivallent of rent) then you shouldn’t have any issue with the payments that were made in connection with this mortgage.

In terms of CRA, this is a standard unsecured debt that will be released by bankruptcy.

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