Will I lose my house if I go bankrupt?

Thursday, August 27, 2020 - 21:34


A common question I get asked is "will I lose my house if I file bankruptcy?" It's a common questions because there is a misconception when it comes to bankruptcy that if you file, you will lose everything you own. 

The answer to this particular question is, it depends! It depends on whether or not there is any net equity available if your property was to be sold. Net equity is calculated as: appraised value minus selling costs and mortgages.

If there is no net equity in your property (ie: the value of your property is less than the amount of your mortgages and selling costs) then there is no issue with keeping the property.

If there is net equity (ie: the value of your property is more than the amount of your mortgages and selling costs) then your creditors would want your share of this net equity amount to be paid to them.

Having net equity does not mean that you have to sell your house. It does not matter to your creditors whether the net equity proceeds come from the sale of the house by the trustee or from you personally. If you are able to make payments totalling the amount of the net equity, you can keep your house.  

Many people that go bankrupt own their homes. Though some have equity in their properties and others do not, the majority in each group are able to keep their homes despite their filing personal bankruptcy.

If you're considering filing bankruptcy but have concerns similar to this one, book a no-obligation consultation with us today. We will be able to answer all of your questions and help you choose an option that's right for you. 

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