Insolvency Solutions for the Declining Real Estate Market

Not so long ago, investing excess savings in the housing market seemed like a safe and potentially lucrative investment strategy as values were steadily increasing and interest rates were falling.  Due to affordability challenges, inventory levels and rising interest rates, the average home value in Hamilton has decreased 14% year over year from December 2024.  Many mortgages are coming up for renewal in 2026 and will face higher interest rates and thus higher monthly payments further impeding affordability.

We are currently consulting with many debtors who can no longer afford their monthly mortgage payments and the selling value of their house is insufficient to pay the mortgage in full.  They are at a loss as to next steps.

Short Sale of Property

Your realtor or legal counsel may be able to negotiate with your mortgagee to allow a short sale to enable you to sell your house.  You will be left responsible to pay the balance owing but will avoid a power of sale and related legal costs.

Bankruptcy or Proposal

A bankruptcy or a proposal can also address the shortfall on a property.  You can essentially walk away from the property and allow the mortgagee to sell the property pursuant to their security agreement.  Any shortfall incurred by the mortgagee, including legal costs, can be eliminated in an insolvency proceeding.

A free consultation with a Licensed Insolvency Trustee will provide a detailed analysis of your financial situation and potential solutions that will allow you to move forward free from the burden of a mortgage shortfall.  The trustee will consider your assets, liabilities, monthly income and expenses, and any guarantors of your debt in exploring solutions.

The purpose of the Bankruptcy and Insolvency Act is to provide relief to an honest but unfortunate debtor.  No one wants to file a bankruptcy or consumer proposal, but a solution to relieve you of overwhelming debt due to decreases in the real estate market seems to perfectly fit the purpose of the legislation.  Reach out to us today to educate yourself on potential solutions.