Mr
I filed bankruptcy in 2010, trustee calculated my home equity as follows: Market Value of the House – Mortgage – Sales commission – Legal fees. But now they say the new law came out this year, the sales commission and legal fees can not subtracted from the value of the house when you want repurchase the asset.
Can you direct me where can I find this new bankrupcty law in regards to the home equity calculation. Thanks
Posted from: Ontario
The law hasn’t changed per se, but a Court decision is working its way through the system. The Court said that persons that file bankruptcy must negotiate with their trustee to determine how much equity needs to be repaid. Trustees are supposed to do a very simple calculation (house value minus the mortgage) as their starting point – you need to argue for any other deductions.
In my opinion, this ruling is unfair – it allows people that are more familiar with real estate transactions to negotiate a “better deal” then people that don’t know they can offer thier trustee less.
If you have a alot of equity in your home and this makes you uncomfortable then you may hire a alwyer to argue for you (but that will cost you the lawyer’s fee). Try it yourself first. If you don’t think you are being treated fairly you have the right to ask the Court to set the amount you are required to repay (that doesn’t mean you’ll get a better deal – ask what the Court has done in the past BEFORE you decide to go this route).