What To Do When You Can’t Pay Your Mortgage Anymore
This is one of those uncomfortable topics that most people prefer not to talk about but the reality is that it happens. Job loss, illness or other life events can suddenly interfere with the ability to pay a mortgage and it happens to the nicest people. If times are tough at the moment and you are struggling to pay the bills because of a change in your life circumstances, there are things you can do and try that you may not be aware of.
First, consider talking over the situation with a trusted friend, family member or advisor to get some perspective. Sometimes they have an idea or an insight you may not have considered. Maybe a part-time job would help or cutting back on expenses or selling an asset other than your home.
Secondly, look into credit and budget counselling. This type of service is offered by community agencies at low or no charge and is totally confidential. (Beware that there are businesses you might NOT want to deal with and I’d recommend you look at this site to find a reputable service.) Do this at the first sign of trouble so they can help you deal with the monetary issues before they get totally out of control. Often counsellors are able to assist you to consolidate your debts and, they may be able to negotiate with creditors for special or reduced payment terms.
When it comes to your mortgage, believe it when I say that the bank does not want to own your house nor do they want to sell it. They want to recover their investment plain and simple. So, make an appointment with your lender to discuss what options you might have such as restructuring the mortgage to reduce your monthly payments or even defer some at a critical time. This is also the time to learn about the banks options. For example, they could require that the property be sold through a process commonly known as “Power of Sale” but again, this is not what they want to do and it is an option of last resort.
If your mortgage is ensured with either Canada Mortgage and Housing or with Genworth, you might be surprised to know that they too are able to assist in this area. The Genworth website has a “Homeowner Assistance Evaluator” where you can go and complete a brief and anonymous questionnaire. At the end, they will suggest some solutions that may be available to you such as moving your arrears onto your principal owing, increasing your amortization thereby reducing your monthly payment, deferring payments in temporary situations or even arranging partial payments to get over a hump. CMHC offers much of the same according to their site so, if you have an insured mortgage (meaning you put down less than 20-25% of the purchase price when you purchased the home), then these are options to explore.
If you have tried everything else possible, then you have two options of last resort. One is to make a consumer proposal to your creditors surrounding repayment terms of your debts and the second, is to declare bankruptcy. In either case, you need to visit with a bankruptcy trustee who will assist you through the process.
When money worries start to pile up, they become all consuming and overwhelming. Know that you are not alone and help is available. No matter what, you will survive and the sun will rise again tomorrow. What you need now is to reach out and get help in arranging a plan that will deal with the issues at hand. All you need to do is make that first call.