Facing the possibility of losing your home can feel overwhelming and frightening. You might wonder what foreclosure really means and what options you have left.
At A.C. Waring & Associates, we understand that many homeowners find themselves in this difficult situation, especially when multiple debts make it impossible to keep up with mortgage payments.
In Alberta, foreclosure is carried out under The Land Contracts Actions Act. This action allows your mortgage lender to sell or take ownership of your home when you are in default under your mortgage contract. Default may include any of the following: non-payment of property taxes, insurance expiry and arrears of mortgage payments. However, you still have limited rights and options to protect yourself even when foreclosure proceedings begin.
Understanding these options, including what happens after a mortgage foreclosure, can help you make informed decisions about your financial future.
Understanding Home Foreclosure in Alberta
Foreclosure happens when your mortgage lender goes to court to sell or take legal ownership of your home. This is different from a ‘power of sale’ in other provinces where the lender can sell your property without going through the courts.
Your lender typically starts foreclosure proceedings after you have missed several mortgage payments, usually 3 months or more. In the case of a condominium the lender may also commence foreclosure if you are seriously in arrears of paying your condo fees.
You have important, but limited, legal rights during this process, including the right to receive proper notice, respond to court proceedings, and ask for more time.
How the Foreclosure Process Works
The foreclosure timeline typically starts after you have missed 3 or more mortgage payments. Your lender will first send demand letters asking for payment of any arrears.
If you cannot catch up on payments, your lender will often refer the matter to a solicitor who files a court application for foreclosure, also known as a Statement of Claim. You will receive legal documents that give you a specific time period to respond. Although the solicitor’s documents usually demand payment of the entire mortgage amount, such an enforcement may not occur if the court allows you to remedy the default.
During court proceedings, you can present your case and ask for more time to cure this default. The judge may grant different orders, including an appraisal and an extension of time to pay. In the process of reviewing your financial situation, a Licensed Insolvency Trustee can help you consider what to ask of the court.
Provincial Differences in Foreclosure Laws
Alberta uses a judicial foreclosure system, meaning all foreclosures must go through the courts. This gives you more opportunities to respond. However, ultimately you must either cure the mortgage default or proceed to foreclosure.
British Columbia lenders can choose between foreclosure through the courts or power of sale. Power of sale is faster for lenders, but still requires proper notice to the owner.
Financial Impact of Losing Your Home
When a final order of foreclosure is issued by the courts, you will typically have 30 days to vacate the property. Not doing so could result in a further award of costs against you.
If your home sells for less than you owe, you may also be liable for the remaining balance including foreclosure costs if it was a CMHC guaranteed mortgage.
Foreclosure may be reported on your credit bureau for 6 years. This may make it much harder to get approved for future mortgages, loans, or even rental a situation.
The amount still owing after the property is sold is called a deficiency judgment subject to property values at the time of sale. This means you could lose your home and still face significant debt. The impact on future mortgage eligibility can be substantial, making it important to explore all available options before foreclosure completes.
Warning Signs You Are Heading Toward Foreclosure
Missing 3 or more mortgage payments is a fairly certain event that will cause foreclosure proceedings soon. Do not wait until you are further behind. Seek our advice.
Formal demand letters from your lender requesting immediate payment are serious warning signs. These letters often mention legal action if you do not comply with the lender’s demands..
Receiving legal notices, court documents, or visits from process servers means foreclosure proceedings have likely already begun. You may still have time to explore options, but you need to act fast. Dealing with your total financial situation early enough may help you take action before foreclosure becomes inevitable.
Your Options Before Foreclosure Happens
Contact your lender immediately to discuss catch up payment arrangements or mortgage modifications. Many lenders prefer to work with you rather than go through expensive foreclosure proceedings.
Consider selling your home before foreclosure is carried out to conclusion. This gives you more control over the selling price and timing, and may help you avoid some of the negative credit bureau statistics.
A consumer proposal may slow down foreclosure proceedings by providing legal protection from other creditors while you work out a plan to deal with your debts. This option often allows you to keep your home while reordering your overall debt load. Understanding how to qualify for debt relief in Canada can help you determine which options might work for your specific circumstances.
When Bankruptcy May Help
Bankruptcy affects secured debts like mortgages differently from unsecured debts. If you are unable to remedy the default, you may still lose your home; however, bankruptcy can eliminate other debts that are making it impossible to afford your mortgage. Furthermore, Bankruptcy will give you relief from a deficiency judgment if foreclosure proceeds.
Bankruptcy can protect you from certain collection activity and give you a fresh start financially. This protection might provide the breathing room you need to address your mortgage problems.
You Don’t Have to Face Foreclosure Alone
At A.C. Waring & Associates, we understand that facing foreclosure feels isolating and intimidating. Our Licensed Insolvency Trustees have helped many people in your situation find practical solutions.
We offer free consultations to review your complete financial picture and explain all available options. Whether it is a consumer proposal, bankruptcy, or other debt solutions, we’ll help you understand what might work best for your specific situation.
Do not wait until foreclosure proceedings are too far along to explore your options. Contact us today to discuss how we can help you protect your home and your financial future.
Key Takeaways
- Foreclosure is a legal process where your lender either sells or takes ownership of your home due to a default of the mortgage terms.
- You have legal rights and options during foreclosure proceedings, including negotiating with your lender or asking the court for more time.
- Consumer proposals and other debt solutions help you avoid the continuation of foreclosure
- Licensed Insolvency Trustees can provide free consultations to explore all your options before it is too late
