What is Equity?

Do they take your home when you file for bancruptcy? What exactly is equity. Is it the amount your home is worth? or is it the amount you have paid down? I have a $340,000 mortgage and I owe $340,000 on it. Can they take my home. Can they take my home if I just file a Proposal?

Posted from: British Columbia

One Response to “What is Equity?”

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

Equity is the difference between the value of your home and the mortgages attached to the property. So if you have a $340,000 property and a $320,000 mortgage you would have $20,000 of equity.

Whether or not you are able to keep your home during a bankruptcy really depends on the amount of equity in the property. If it is less than the amount allowable in your part of the province (in Greater Vancouver and Victoria the exemption limit is $ 12,000, in the rest of the province it is $ 9,000) then there will be no impact on your house. If you have more than the allowable exemption then either you have to provide the trustee with the difference between the amount of equity you have and the exemption limit or the property would have to be sold.

In terms of a consumer proposal, there is no automatic vesting of assets like there is in a bankruptcy, but the equity is indirectly considered as you have to offer more to your creditors than would be available if you filed for bankruptcy.