Step-by-Step Checklist: What to Do With Your Mortgage Before Filing Bankruptcy in Ontario
Getting Ready for the Tough Mortgage Talk
Facing financial challenges that lead to considering bankruptcy can be overwhelming, especially when a mortgage is involved. For Ontario homeowners, knowing what to do about your mortgage before you talk to a Licensed Insolvency Trustee can really help. This turns uncertainty into clear, practical steps you can take.
This guide offers a calm, step-by-step checklist to get you ready. It's all about making decisions based on facts, not fear.
Step 1: Write Down Your Full Mortgage Picture
First things first: get all the key details about your mortgage together in one spot. This includes:
Current outstanding balance
Interest rate
Remaining term length
Monthly payment amount
Any arrears or missed payments
Having these numbers written down helps you have clear, accurate talks with your trustee and gives you a real picture of your financial position.
Step 2: Estimate Your Home’s Current Value and Equity
Next, try to figure out roughly what your home is worth right now. Here's how you can do it:
Look at what similar homes in your area have sold for recently.
Use online home value estimators, but remember they only provide a rough idea.
If possible, get a professional appraisal.
Once you have that estimate, subtract your mortgage balance to see how much equity you might have. This doesn't have to be perfect, but it gives you a good starting point.
Step 3: Be Honest About Affordability
Take a good, honest look at your household income and expenses. Ask yourself if keeping your home is truly affordable in the long run after bankruptcy. Key questions to consider include:
Can you honestly afford your mortgage payments and your other living costs once your debt relief is complete?
Would selling the property significantly improve your financial situation and help you move forward?
Being honest with yourself will help you set realistic expectations and guide your discussions with professionals.
Step 4: Gather Property and Mortgage Documents
Before you meet with your trustee, pull together these important documents:
Recent mortgage statements and renewal letters
Property tax bills
Condo fees or association dues, if applicable
Home insurance policies
Having all these documents ready means everything is clear and helps your trustee give you advice faster.
Step 5: Decide Your Working Priority
Before you talk to a trustee, figure out what you really want to happen with your home. Are you hoping to:
Keep your home and continue payments after bankruptcy?
Plan to sell during or after the process?
Remain open to professional advice before making a final decision?
Knowing your priorities ahead of time will make your meetings much more focused and productive.
Step 6: Home-Specific Questions for Your Trustee
Write down specific questions so you fully understand all your choices, such as:
What happens to my mortgage if I file bankruptcy?
How does my home equity affect the bankruptcy process?
Are there alternatives to bankruptcy that can protect my home?
What are typical timelines for decisions regarding the mortgage?
How can missed payments impact my standing with the lender?
Having these questions ready will help you make well-informed decisions.
Step 7: Know When to Loop in Other Professionals
Depending on your specific situation, it can be helpful to speak with other specialists:
A mortgage broker can review refinancing options or other loan products, either before or after you file.
A real estate agent can provide market insights if you need to sell.
Bringing in the right experts at the right time can save you unnecessary headaches.
Step 8: Emotional and Family Preparation
Decisions about bankruptcy and your mortgage aren't just financial — they affect your family's well-being. It's important to:
Talk openly and kindly with your partner or family members.
Address feelings of shame or anxiety with empathy — for yourself and others.
Make sure everyone is on the same page about expectations and priorities before final decisions are made.
Being emotionally prepared goes hand-in-hand with financial preparation and helps you stay steady through the process.
Printable Summary Checklist
To make things easier, consider printing a checklist that summarizes all these steps and bringing it to your trustee meeting. It can boost your confidence, help ensure a thorough discussion, and prevent important details from being missed.
Conclusion
Trillium Mortgage is a Toronto-area mortgage advisory firm experienced in situations involving bankruptcy. They help homeowners navigate financial restructuring and provide clear, practical options.
