I don't know anything about bankrupcy. Why can't you walk away from a mortgage here?
Also with bankrupcy, can you just declare it or do you have to get rid of your other asssets first like savings or RRSP's?
The laws are different between every state. Some states only let the banks go after the property, not the motgagee. All banks in these states have rights on are proceeds from foreclosure. In Canada, I think banks can sue for the remaining payments and this judgement will follow a person after a foreclosure sale. They probably could only escape it with a successful bankruptcy proceeding. Bankruptcy requires a filing with the court's in Canada. The terms and conditions are determined by the court. Disclaimer: all this is just my own lay person understanding. I'd appreciate correction from anyone more knowledgable in these things.
What the hell happened in High River to jack prices up so high? And then what the hell happened to make them dive so much so fast? I wouldn't have thought there was any place in Canada that would fall so drastically. That's Phoenix level diving.
Go see a financial counsellor but be careful. Some are just in the business of selling bankruptcy. They make money when you have to liquidate and they don't really care how it affects you. They will tell you how easy it is to get back on your feet. Bankruptcy will dog you for 7 years minimum. Guaranteed. You will spend a good chunk getting back on your feet. Don't make that decision lightly. A lot of our parents made it through years of high intrest an underwater situations. Have your condo appraised and take a good look at your mortgage. You might not be near as bad off. Thats a huge differential. Did you use the equity to buy some toys? If so you need to factor them into the value.
If you file they will take everything. Rrsps, savings, vehicles, you get an exemption for personal stuff but unless you cheat the system you will lose everything of value.
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What the hell happened in High River to jack prices up so high? And then what the hell happened to make them dive so much so fast? I wouldn't have thought there was any place in Canada that would fall so drastically. That's Phoenix level diving.
I know a fellow that took a huge loss in Kelowna. All equity gone and came here with 40K debt (negative equity) just to close the sale. Bank would not let it go.
We will be hearing about these more often soon. Our media is more interested in the helicopter RE tour stories in Van.
A friend of mine was in the same situation. They bought a condo in High River for around the same price and with the value of the condo now less than 50% of the purchase value they saw a financial adviser about the situation. The advice they got was to declare bankruptcy and foreclose. The advice they received on renting out their place and waiting for the market to recover was, the market is never going to recover and they would never receive an amount they paid for their home.
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^^^ many people in that situation do walk away. Next thing you know you have a empty condo complex, red flagged and buyers come in and get an even better deal as they are forced to put 20% down.
For the record, I am not giving advice on the situation and suggest speaking with a financial adviser but you need to decide:
a handful of years of hurt credit followed by a rebuild with a possibility of buying again in under 10 years or payments on a property for another 20-25 years that equal double what the place is really worth.
If you can rent it out and come close to breaking even, that is obviously an ideal situation although I have a tough time thinking that the rental rate will even come close to paying for the mortgage, taxes, condo fees etc.
but luckily, squiggs came in after you posted about a tough situation in your life and really contributed to the thread.
Good luck, your not alone...I pull titles on the regular for properties worth 50-75% what the owner paid during the boom.
Travis, this is exactly why people should consider a mortgage debt. I'm not sure why you're getting upset at me for it. It was your statement, poll and position. My comment, while in jest, was on topic, and brought back the thread where this was debated.
For the OP, I'd take a look at what you can do going forward. The purchase price is irrelevant and is a sunk cost. It's the same about owning a stock that you bought at $40 per share and is now at $20 per share. It doesn't matter that you lost half of it, but what's the best step to gaining the most money out of what you currently hold. You are going to have to bring money to the table to get out of the mortgage at some point. If you can afford the $135,000 hit now, it may be beneficial to sell. You'd be mortgage free and would still have good credit.
If you can stand living there and can afford your mortgage, the purchase price and mortgage amount don't matter that much. You only lose or make money on a sale when the sale closes. If my house went up by $200,000, that doesn't mean anything to me, as I still need a place to live. If it went down $200,000, same thing. It's only a problem if you can't afford your payments or you are nearing retirement age and are trying to cash out. It doesn't sound like you are in either case.
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Originally Posted by Bingo
Jesus this site these days
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Originally Posted by Barnet Flame
He just seemed like a very nice person. I loved Squiggy.
Luckily, according to Realtor 1 and 20% of CP, that $285,000 isn't debt.
Noone said it wasn't debt. What peolpe were saying is that if you count that as debt, then you have to count the value of the house as an asset. Therefore, if you are not underwater you have a net asset.
If I was you I would talk to a legit credit counsellor. I would recommend www.moneymentors.ca as they're nonprofit and will go through your options with you. There are other options under the bankruptcy act, and perhaps something else might be more fitting for you. I really don't know, but they will.
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Originally Posted by speede5
Go see a financial counsellor but be careful. Some are just in the business of selling bankruptcy. They make money when you have to liquidate and they don't really care how it affects you. They will tell you how easy it is to get back on your feet. Bankruptcy will dog you for 7 years minimum. Guaranteed.
I am unfamiliar with www.moneymentors.ca but professional advice from a credit/financial advisor is a very good idea - hopefully they can provide additional options and ideas that haven't been mentioned here. Sorry to hear about your difficulties but hopefully you can find a reasonable financial path out of it.
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Exp:
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Originally Posted by squiggs96
You are going to have to bring money to the table to get out of the mortgage at some point. If you can afford the $135,000 hit now, it may be beneficial to sell. You'd be mortgage free and would still have good credit.
From the sounds of things, he likely doesn't have that kind of money to bring to the table. I don't know of many people who would be in a first time home buyer situation who would.
Ouch, that's nasty. Out here in Chestermere there's a lot of people in similar situations; at the peak 2400sqft 3 bedroom homes were selling for well over $600k.. $700k even, or more if it was a great lot or was in a premium area, but even the run of the mill ones were $650k new.
Now the resale for those homes are $500k and it doesn't seem to be changing much.
I know a number of people that are in the same situation.. some will just live in their places (or rent them out) until resale gets back, or some have sold and ate the $150k loss.
Similar situation too, new build (as opposed to a resale) and in an outlying community.
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