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If you have unsecured debt of under $10,000 and live in the Province of Ontario filing bankruptcy may not be the best option for you. We suggest you contact the Office of the Super Intendent of Bankruptcy at 416-973-6441 to discuss your options, or you can visit their website here.

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Same creditor for mortgage and unsecured debt

Hello,

I am looking at filing a consumer proposal, however, the bulk of my unsecured debt is held by the same institution that holds my mortgage. I would like to keep my home. Will they be less likely to include the mortgage prepayment penalty against the equity in the home when calculating the amount I need to pay toward the unsecured debt? I know that typically in ON one would deduct the real estate commissions, legal fees (does this include land transfer tax applicable to a change in ownership??) and mortgage prepayment penalty from the home equity. How this is calculated is very important in my situation in terms of how much equity I really have in my home. Thanks

Posted from: Ontario

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One Response to “Same creditor for mortgage and unsecured debt”

A licensed trustee said...

Technically, the equity calculation is “negotiated” with your trustee and creditors. So, you’ll want to deduct the mortgage penalty, but the creditors may counter-offer without it.

At the end of the day you need to offer enough money in your proposal to induce the creditors to agree to the deal. House equity is one component, but it really comes down to “how much is enough”. Hopefully your trustee files enough proposals to be able to give you a realistic estimate of what you will need to offer.