What Happens to Our House?
My wife were married in 1992. We have a marriage contract which states we are separate as to property. We own a small house which is in both our names. If one of us declares bankruptcy, do we risk being forced to sell our (jointly-owned) home to settle the debts?
Posted from: Quebec
If you have equity over and above the provincial exemption allowable the options are as follows:
1. The trustee could get an order from court requiring the house to be sold and the bankrupt spouses portion of the non-exempt equity paid to the bankruptcy estate;
2. The trustee could negotiate with the non-bankrupt spouse and arrange for that spouse to obtain a second mortgage for the balance of the non-exempt equity.
Most trustee’s prefer the second option, but if that is not possible they may be forced to sell the property.