As I discussed earlier this month, house prices in Cambridge started increasing around the year 2000. This increasing house equity has given many Cambridge residents the ability to borrow against the equity in their house, often to repay higher interest rate debts like credit cards.
But what if you don’t have equity in your house, or if you still have debts and are now considering personal bankruptcy. If you own a house, here’s what you need to know:
If you go bankrupt in Cambridge, as your trustee I am required to recover the equity in your house. For example, if your house is worth $200,000, and your mortgage is $150,000, then your house has equity of $50,000. (If your house was to be sold there would be real estate commissions and other expenses, so in an actual bankruptcy this calculation would be more complicated). If you were to go bankrupt, you would be required to either pay $50,000 to the trustee (to be distributed to your creditors), or you would be required to surrender your house.
Of course if you have a house with no equity, then you would not lose it if you went bankrupt, provided you kept making your mortgage payments.
If your house has equity, but not enough equity to qualify for a debt consolidation loan, you could consider selling the house, or you could consider a consumer proposal as a strategy to deal with your creditors without losing your house.
If you own a house in Cambridge and you have financial problems, you need expert assistance, so e-mail me or call my office at (519) 622-3773 to arrange a free consultation so we can review your house situation in more detail.
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