Can I Sell my House to Pay Off a Consumer Proposal in Canada?

Do you own a home that has some equity but not enough equity to be able to refinance and pay off your unsecured debts such as credit cards and/or lines of credit? If so, then a consumer proposal is a good way for you to deal with your debts and avoid filing for bankruptcy.

A consumer proposal in Canada allows you to keep your home and equity and make a deal with your creditors to settle your debts.  Filing a proposal is different from filing a bankruptcy in several ways.  One big difference is that you remain in control of your assets when you file a consumer proposal.  This means that you have the ability to sell an asset without needing the consent of your Trustee.

At some point during your proposal you may decide to sell your home to pay off your consumer proposal early.  Selling your house is allowed and, in fact, there are several benefits to paying off your proposal early. The biggest benefit to you is that the faster you pay off your proposal the faster it will purge from your credit report allowing you to rebuild your credit quicker.

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2 thoughts on “Can I Sell my House to Pay Off a Consumer Proposal in Canada?

  • Carol

    Hi there, we are considering selling our home after many years. Both my husband and I did consumer proposals Nov, 2013, after many problems with his business, very stressful, but no choice.
    Now thinking of selling, paying off Proposals and debt, to be debt free, Obviously we must rent after we sell, and wondered how hard that is when most renters ask for Credit reports? What happens next? Thank you.

    Reply
    • J. Douglas Hoyes

      Hi Carol. Being debt free is a great feeling, so yes, selling your house to pay off your consumer proposal may be a good idea.

      As for renting, you are correct, many landlords will run a credit check on you, and your proposal may make it more difficult to rent. However, in my experience, that is seldom an issue. Landlords are not lending you any money, so it’s not as hard to qualify to rent as it is to qualify for a mortgage. What landlords most care about is “can you pay the rent”? Once you sell your house you should have no problem coming up with first and last month’s rent, and assuming you have a decent income, renting should not be an issue.

      If you find it’s a problem, you may want to look for a private rental, such as renting a house or part of a house directly from the owner, as opposed to renting an apartment from a large corporation that is more likely to care about what’s on your credit report.

      Reply

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