A secured debt can be a debt incurred in order to purchase an asset, like a mortgage given upon purchase of a house. It can also be a loan given with assets pledged as security, such as a finance company that lends you money in exchange for some collateral, such as your furniture or other personal property, which is then registered with the provincial government. As long as the payments are made as agreed, you can keep the secured asset.
If payments are not made, the lender can enforce their security, meaning they can take back the asset pledged against that loan. So if you stop making car loan payments, the finance company will seize the car. If you don’t pay your mortgage, the bank will foreclose on the house. (Note that personal property and furniture pledged against a loan generally cannot be seized, due to provincial legislation prohibiting seizure of such property up to a certain value.)
Bankruptcies and proposals tend not to address secured loans, although they must be declared. Talk to your trustee if you have specific questions or concerns.
Do I have to pay a minimum portion of the debt I owe?
Not in a bankruptcy.
In bankruptcy, you only pay a basic amount for fees, or an amount based on calculations regarding your family income, based on the guidelines published by the Office of the Superintendent of Bankruptcy.
Many assets are exempt from seizure by the Trustee, but for those that are not, the Trustee has a legal obligation to obtain the cash value of those assets. You may decide to repurchase those assets from the Trustee over time, or request that the Trustee cash them instead
Would your service prevent me from receiving a mortgage?
There are a number of issues to consider when considering a bankruptcy or a consumer proposal, when a mortgage is in play:
Are you applying for a new or increased mortgage, or switching to a new lender?
Are you renewing an existing mortgage?
Are your payments up to date? Are you behind on other loans with the same bank?
Are you applying for a second mortgage?
Are you under time pressure, either to renew, or to file a bankruptcy or a consumer proposal?
Clearly, there is no simple answer to your question, as you may be facing one of many different mortgage scenarios.
In our experience, renewing an existing mortgage while in bankruptcy or a consumer proposal usually does not present any difficulty. However, each situation is unique. If you are not under time pressure, use the opportunity to get the best information you can. Talk to your mortgage broker about your situation, or talk to a Trustee about your debt options.
Your spouse will not be legally affected by your bankruptcy just by virtue of being married to you. One spouse is not liable for the other’s debts, unless he or she has agreed to pay them by co-signing or guaranteeing the debts. Assets exclusively in the spouse’s name will not be part of the bankruptcy.
There are several other things to consider:
If he or she has a supplemental credit card, there may be liability for the amounts spent on the supplementary card.
If assets have been transferred to the spouse’s name, the trustee will have to investigate the timing and circumstances of that transfer.
If assets are in both names, your Trustee will talk to you about your options in respect of those assets (and you usually will have options).
If your loans have been co-signed, your spouse will have to consider the options available for dealing with the creditors.
Also, remember that your not having credit cards will affect your family spending habits. Talk to your spouse about making positive changes in your financial lives.