Bankruptcy: My Name is Still On My Ex-Spouse’s Home

If you declare personal bankruptcy in Canada, your ex-spouse may be affected if you have a joint mortgage.

Your personal bankruptcy will remove you from your responsibility to pay that debt; however, it does not:

1. require your mortgage lender to take your name off of the mortgage;

2. take your name off of the deed/title.

Technically, when you declare bankruptcy, all your assets are assigned to your Bankruptcy Trustee (Licensed Insolvency Trustee). Your Bankruptcy Trustee is then required to sell your non-exempt assets. Generally, your Trustee will sell the non-exempt asset to you.

For a more detailed explanation of exempt versus non-exempt assets, see our blog post “what assets can New Brunswick residents keep in bankruptcy“

If the home has no equity, the Trustee can arrange with your ex-spouse to transfer your interest in the property to your ex-spouse. To complete this, the Trustee will sign a Trustee’s deed.

If the home has equity, your Trustee will be required to recover the equity on behalf of your unsecured creditors. The ex-spouse can negotiate a settlement with your Trustee to purchase your interest in the property in exchange for a Trustee’s deed giving them full title to the property. If the Trustee and your ex-spouse can not reach an agreement, the Trustee will register against the property until a settlement is in place.

To get your name off the mortgage, your ex-spouse will have to qualify for the mortgage on their own when the mortgage comes up for renewal. Whether or not they qualify is up to their financial institution.

We advise against signing any mortgage renewal documents if you have given up your interest in the property. If you sign the renewal to help out your ex-spouse, you will be liable for the mortgage, if your ex-spouse defaults on the mortgage.

Other related articles: Will I Lose My House If I Go Bankrupt?

Powell Associates Ltd. is a Licensed Insolvency Trustee. We are experienced, hands-on insolvency practitioners who understand the personal impacts of major financial stress;

• You won’t be stuck in an assembly line process.

• You will expect and receive prompt responses and resolution of issues from our supportive and experienced team.

• We will review your debt solution options, including filing a consumer proposal or personal bankruptcy.

• We help Canadians with overwhelming debt get fresh financial starts.

Once you file a consumer proposal or personal bankruptcy, we deal directly with your creditors on your behalf. Your unsecured creditors are required to stop contacting you or continuing legal proceedings against you. Contact us for a free consultation.

We offer free consultations to review your financial situation and practical debt resolution options. Contact us to discuss your situation over the phone, a video chat, or in-person in Saint John, Moncton, Fredericton, Charlottetown, Dartmouth, or Miramichi.

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