When Canadians sell a property for less than is owed in the mortgage, lenders are entitled to pursue any balance remaining plus interest, fees, and legal costs; this includes garnishing bank accounts and income.

For those in debt strife, it’s wise to speak with an Insolvency Trustee to consider if you may be a candidate for bankruptcy or a consumer proposal that negotiates outstanding sums down to a feasible repayment plan and often allows debtors to keep their home and other assets. See more here.

The latest MNP Consumer Debt Survey found Canadians’ current debt perception at an all-time low, with 63% of respondents saying they were worried about their ability to repay their loans.

“Spending on credit has served as a relief mechanism for many to keep up with increasing costs, especially for lower-income Canadians. We see from the data that the burden of repaying that debt is exacerbating the growing financial strain for many households, particularly amid higher interest rates,” says Grant Bazian, president of MNP LTD, the country’s largest insolvency firm. “Most things cost more and debt repayment costs more. That leaves more Canadians feeling pessimistic about paying off debts, making ends meet, and about their financial futures.”

Meanwhile, most Canadian mortgages face much higher interest rates on term renewals every month through 2024-2026. Adding to costs, the City of Toronto just announced plans for a 10.5% property tax increase, and other cash-strapped municipalities are likely to follow suit.

For-sale listings are rising daily in most areas, and the price drops for any selling are significant. This is not likely to turn around quickly. Fewer transactions and lower prices also mean less land transfer tax revenue for provinces.

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