Consumer Proposal – home equity Line of credit
Is a home equity line of credit considered a secured creditor? If so, I am currently past due but have made arrangements to resolve the outstanding amount. Once I clear up the amount outstanding and file a consumer proposal, will the bank go ahead with a foreclosure even though I brought the account current?
A home equity line of credit is generally secured to the house as a registered lien and the bank that holds the loan has the same rights as a mortgage holder. If you clear up the outstanding amount, the bank should not take steps to foreclose on your property. There may be other factors that you have not outlined in your questions, that would change things in your situation, but in general if a secured loan is up to date then the bank is unlikely to take action against your home. If you file a consumer proposal this is not going to change their decision, although it may change the nature of the credit line. A line of credit is normally revolving credit where you can pay down the credit line and then use the available credit again. When an individual files a consumer proposal, banks and credit unions will often freeze this feature of the credit line so you may lose the privilege of re-borrowing against the line of credit.
In your consumer proposal documents the Administrator will state that the line of credit is going to be paid under the terms of the existing contract. This way there is no question as to your intention to maintain that debt.