How Does Bankruptcy Affect My Common Law How Is My House Affected

2010-12-01

When you file a bankruptcy or a proposal, you are required to disclose the number of members in your household family unit.  The surplus income payment that you make into your bankruptcy is based on that number of people and the total household income.  Your monthly reporting after that is based on the entire family unit. Also, if your common-law has co-signed on any of the debts that you are including in your bankruptcy, he would become liable for that debt.   Similarly, if you have co-signed on any of his debts, you have to list those debts in your bankruptcy.  IE:  the lender can not come after you for the debt any more and they need to know this.  So whether or not his debts would be affected by your co-signature is going to depend on whether or not he has been making the payments and able to do so in the future. With respect to your home, you are allowed to keep $40,000 equity per house when you file for bankruptcy in Alberta.  So depending on the amount of equity, the bankruptcy may not affect it at all.  Or you may have some equity over the $40,000 that you would have to "buy back" from the bankruptcy estate. Also in Alberta, if you are current with your mortgage payments, the lender can not call the loan.  You want to be careful about when your mortgage is due to be renewed.  You likely don't want this renewing while you are in the middle of your bankruptcy.  If the loan against your house is a line of credit, you may want to lock into a mortgage before you file for bankruptcy.  A line of credit is not a mortgage and can be demanded. If you would like to discuss the specifics of your situation, don't hesitate to contact one of the Trustees or counsellors in your area.  They are found on our site atClick here. Donna Carson, CGA, CIRP, Trustee 1.877.500.0792    [email protected]     ​