Bankruptcy in Ontario: What Happens to My House and Car?

| Category: What You Keep or Lose
Category: What You Keep or Lose

Question: Hi, my boyfriend is heavily in debt and we would like to seek some advise. He has $70,000 in credit card and line of credit debt and is having a hard time coping up with the payments since he only works part time. The only assets he has is his car that he has paid off a long time ago and the house his parents bought which is named after him, his sister and brother. If he decides to file for bankruptcy in Ontario what will happen to the house that is house and also to his car? I hope you can help us. Thank you very much!

house and car in Ontario bankruptcyA house and a car may be exempt in a bankruptcy in Ontario, depending on their value.

If you file bankruptcy in Ontario, you are required to either surrender your house to the trustee, or pay to the trustee the equity in your house.  Equity is the value of the house (the difference between the value of the house, and the amount owing on the mortgage and other charges).  If there is no equity, you could keep your house (provided you keep the mortgage in good standing).  In your brother’s case, if the house is owned jointly by him, his sister, and his brother, he would only be required to pay his share of the equity (presumably one third).

He should get an appraisal on the house, and confirm the balance owing on the mortgage, and then meet with a trustee to discuss his options.

For the car, if there are no loans against it, you can keep a car worth up to $5,650 if you go bankrupt.  Since his car is old, it is probably not worth more than that amount, although again he can have it appraised to be sure.

More information can be found in this article on what happens to your house if you file bankruptcy in Ontario, and what happens to my car if I file bankruptcy in Ontario.

For a review of his exact situation, he should consult an Ontario bankruptcy trustee for a no charge initial consultation.