Bankruptcies and Consumer Proposals

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Life After A Bankruptcy Consumer Proposal

bankruptcy is when you assign (give over) everything you own to an Insolvency Trustee (Licensed) in exchange for eliminating your debts. Sounds straight forward but there are rules and guidelines to follow and they can differentiate in every province. Be sure to contact your local Licensed Insolvency Trustee to get accurate and up to date information. The process is governed by federal law and is a legal procedure. What are some of the options to get a mortgage while in a bankruptcy?
  • Home Equity Loan – a regular solution to clear up an existing bankruptcy and get rid of the balance outstanding.
  • Private Mortgage – whether it be to purchase a new home or refinance an existing property.
  • Alternative Lender – bruised credit or past credit woes do not mean the answer is always no. Alternative lender financing can be a great solution.
  • Second Mortgage – like a home equity loan you can use the funds to clear up debts and get back on your feet financially.
How do I refinance a home if I’ve had a past or current bankruptcy? The key to refinancing a mortgage while in a bankruptcy consumer proposal is choosing the right team. There are a number of lenders that look at the big picture. The right team of mortgage professionals can help connect you with those lenders. How do I purchase a home if I’ve had a past or current bankruptcy? A previous bankruptcy consumer proposal can affect which lenders will consider you for a mortgage. Don’t worry it’s not the end of the world. There are two approaches that can be used to help you purchase that home.
  • The first option is using an alternative sub-prime lender that will consider offering you the financing you need to purchase a home. The down payment requirement is generally 20% of whatever the purchase price of the new property. i.e. $100,000 x 20% = $20,000. That means for every $100,000 you will be required to put 20% down on a property. Depending on the location of the property the amount required could be greater so please do not hesitate to contact us if you are unsure.
  • The second option is to rebuild your credit and allow sometime to pass before trying to purchase a home. It will take sometime but the goal is to put as little down as possible. This can only be done with and A lender. To access this kind of lending you will need to show that you were able to re-establish your credit through time and discipline.
What are some of the common options to get a mortgage with a bankruptcy consumer proposal?
  • Home Equity Loan – this can help you obtain funds to payoff your proposal early and start rebuilding your credit score quicker. So  approval is based on equity and not credit, or  just income.
  • Private Mortgage – A private mortgage is a great option because it gives you the fastest access to the equity in your home.
  • Alternative Lender – Sub-prime B lenders will consider mortgages up to 80% of the properties value so a 20% down payment will be needed.
  • Second Mortgage – institutional and private financing second mortgage options to help rebuild your credit, clear up your consumer proposal or even obtain some additional funds for personal use.
How do I refinance a home if I am in a proposal or recently paid one off? In the mortgage lending world there’s a place for most situations. So refinancing while in a proposal is possible. Alternative lenders are willing to work with you to off pay consumer proposals.  A mortgage refinance can be put in place that can help  your credit recovery. Can I buy a home if I am currently in consumer proposal? There are a number of lenders that will consider offering you a mortgage while in a bankruptcy consumer proposal. Private mortgage lenders would be the main option. Institutional mortgage lenders would require that you payoff your proposal prior to closing a mortgage on your new home. The down payment required whether you are in a consumer proposal or discharge from one will be 20% of your homes purchase price (subject to change). The more money you have to put down a purchase the more lenders you’ll have access too. Why you should pay off your consumer proposal early?
  • Some proposals have a built-in clause with an early payoff discount which could save you a lot of money.
  • You’ll eliminate another monthly payment from your budget which will free up money to do the things you really want to do.
  • Your credit report will show the discharged proposal for 3 years after you make your final payment. By paying it off early, you will reduce the amount of time to qualify for a bank or institutional mortgage.
Paying off your consumer proposal early is the best way to improve your credit. It will allow you to apply for credit sooner and open more doors. Looking for more information or help; give us a call today to find out more.