We have stated before that bankruptcy will not solve a foreclosure in Canada because secured debts such as mortgages are not allowed to be included in a bankruptcy in Canada. Bankruptcies can only apply to unsecured debts such as consumer debt, credit cards, and unsecured loans. However, where bankruptcy may come into play with the foreclosure process is after a foreclosure has been finalized and you are handed down a deficiency judgment by the court.
A deficiency judgment is a legal judgment against you for money owed beyond the value of the property that was foreclosed upon. If at all possible you will want to do everything you can to avoid having a deficiency judgment against you as this would mean having to personally owe the bank a very large sum of money even after they have taken your home. However, deficiency judgments do happen, and in many cases, a deficiency judgment often leads to wage garnishment and/or personal bankruptcy.
Bankruptcy following a foreclosure is an option. However, it is a very dire one that is best left as your last option. If you are facing, or currently in, foreclosure, be sure you know all of your options first before going it alone. Contact us to see how we can help you save your home, save your money, and save you from a deficiency judgment.
