Are Your Credit Cards Really Secured On Your House

Recently, a number of our clients have been rather shocked to find out that debt they thought was unsecured was, in fact, secured on their home. When those individuals last renewed their mortgages with the bank, the mortgage terms were changed such that all money owing to the bank was now secured on the home, rather than just a specific amount related to a mortgage. This could include money owing to the bank for credit cards, lines of credit, shortfalls on vehicle financing and even guarantees on other loans.

The effect of this is that your other debts to the bank effectively would become part of your mortgage and, if you don’t pay those debts, they can foreclose on your home, just as they could for your main mortgage debt. It also means those other debts cannot be dealt with through a bankruptcy or consumer proposal because they are secured on your home.

There is no way for a Trustee to find out if the mortgage documentation says this by doing any sort of general search. Instead, we must look at your individual mortgage agreement. If you have other debts with the financial institution that finances your home, take care to check your mortgage documentation carefully or you could be in for an unpleasant shock (and greatly reduced flexibility in dealing with your financial affairs).