The last thing you want happening to you is not paying your mortgage on time or not being able to repay your mortgage completely. But in reality, financial problems can occur at any time and managing them can be difficult.
If, unfortunately, you find yourself in a situation where you can not repay your mortgage, do not ignore this problem under any circumstances. Banks are more inclined to renegotiate your mortgage if you do not ignore them. Rather, take the initiative:
- Contact your creditor right away, even if you are not 100% certain that you can not pay
- Be as honest and transparent as possible so they can help you better
- If a second chance is offered, work hard to demonstrate that you are serious
- Cooperate with everyone
Whatever the reason, if you can not make your payment, get ready to hear the word entered. Although the majority of creditors do not want to seize your house, if you do not make the necessary payments, they have the right to do so.
Rather than waiting for the inevitable to arrive, you must take responsibility for what happens and inform yourself about the foreclosure process. Once you understand this process, you will know either how to avoid it or how to reduce the negative effects of it.
What is an entry?
Seizure is a legal procedure that is taken against a creditor who does not make his payments. Since the house that was bought with the mortgage is at the same time the guarantee of the mortgage, the creditor can seize it if the debtor stops making the payments. As this is a legal procedure, the creditor must first obtain court approval. Once the house is seized, it is usually sold for the creditor to recover his money.
Seizure is a serious consequence if you do not make your payments on time. However, be aware that this process does not happen instantly. That’s what you can expect once you have stopped paying:
- You will not lose your house after a missed payment;
- Expect to be contacted by your creditor right away, they will help you establish a plan to pay off your debt
- The seizure is a long and expensive process, your creditor will not suggest it right away
- You will receive letters from your creditors asking you to make the payments, these letters usually arrive after 30, 60 and 90 days.
- Once you exceed 90 days, you will be in default
- If you do not work with your creditor, expect him to start the foreclosure process
In Canada, seizure varies from province to province. So it is your job to inform you about the rules surrounding seizure in your province.
Generally speaking, the creditor has two ways to get his money back.
The judicial sale
Judicial selling is an integral part of the legal system; the seizure being performed under the jurisdiction of the Canadian courts of justice. The process is slow, up to 6 months. Once the seizure permit is returned, the property passes into the hands of the creditor. This means that when the house is sold, the capital will go directly to the creditor.
The judicial sale is enforceable in the following provinces:
- British Columbia
- New Scotland
Right of sale
This process begins when the creditor sends a formal notice to the debtor giving him 35 days of redemption. Within these 35 days, the debtor can start making the payments again and all will end without consequences. If the debtor returns to the right path, the creditor can not invoke the right of sale. However, the debtor will have to cover certain expenses.
The right of sale allows the creditor to sell the house put on legal sale without the involvement of the court. This process is much faster than the judicial sale.
The judicial sale is used in the following provinces:
- Newfoundland and Labrador
- New Brunswick
- Prince Edward Island
Judicial selling is not a process we would like to go through. However, if we prepare well and if we cooperate quickly with our creditor, everything will go very well and in a short time you will be on the right track again.
Did you know that in some cases you can qualify for a refinancing or a 2nd rank mortgage to prevent your property from falling apart?