Worried About Missing Mortgage Payments?
Missing a mortgage payment can feel overwhelming. For many Ontario homeowners, the mortgage is the most important bill they pay each month. When that payment becomes difficult to make, it can create fear, stress, and uncertainty about what may happen next.
You may be asking yourself:
- Will I lose my home?
- Can I catch up on missed payments?
- Can my lender start legal action?
- Can a consumer proposal or bankruptcy help?
The important thing to know is this: missing one mortgage payment does not usually mean you will automatically lose your home. But missed mortgage payments should be taken seriously. The earlier you review your options, the more flexibility you may have.
At David Sklar & Associates, our Licensed Insolvency Trustees help homeowners across Ontario understand their debt relief options and determine whether a consumer proposal, bankruptcy, or another solution may help them regain control.
What Should You Do If You Miss a Mortgage Payment?
If you miss a mortgage payment, contact your lender as soon as possible, confirm the amount owing, and review your full debt situation. One missed payment does not usually mean you will lose your home, but repeated missed payments can lead to serious mortgage enforcement action. If your other debts are making it difficult to pay your mortgage, then speaking with a Licensed Insolvency Trustee may help you understand your options.
Key Takeaways
- Missing one mortgage payment does not usually mean you will immediately lose your home.
- Mortgage arrears should be addressed quickly before legal costs and enforcement action escalate.
- A consumer proposal does not erase mortgage arrears, but it may reduce the pressure from other unsecured debt, improve monthly cash flow, and make it easier to make your mortgage payments.
- Bankruptcy may help with unsecured debt, but it does not automatically stop a secured mortgage lender from enforcing its legal rights.
- Speaking with a Licensed Insolvency Trustee early may help you understand whether a consumer proposal, bankruptcy, or another debt solution is appropriate.
What Happens If You Miss a Mortgage Payment?
What happens after a missed mortgage payment depends on your lender, your mortgage agreement, the amount owing, and how long the payment has been overdue.
In most cases, the lender will first contact you to discuss the missed payment and ask when the account will be brought up to date.
If mortgage payments remain unpaid, the lender may charge late fees, report missed payments to the credit bureaus, demand payment of the arrears, or begin mortgage enforcement proceedings.
One Missed Mortgage Payment
One missed payment is serious, but it does not usually mean the lender will immediately sell your home.
At this stage, the best step is to contact the lender quickly and ask:
- How much is currently overdue?
- Are late fees or legal costs being added?
- Can a repayment arrangement be made?
- Has the file been sent to a lawyer?
- What date must payment be made by?
Ignoring the lender can make the situation worse. Early communication may help preserve more options.
Multiple Missed Mortgage Payments
If more than one mortgage payment is missed, the situation becomes more urgent.
The lender may become less flexible, additional fees may be added, and the file may be transferred to legal counsel or a mortgage enforcement department.
This is often the point where homeowners begin to feel trapped and more stressed. Many people try to cover the mortgage by using credit cards, payday loans, or lines of credit. While this may delay the problem briefly, it can make the overall debt situation much worse.
When the Lender May Take Legal Action
In Ontario, mortgage lenders commonly use a process called “power of sale” when a mortgage is in default.
A lender is required to provide formal notice before proceeding with a sale. Ontario legislation and government guidance provides that where there is no power of sale clause in the mortgage, a statutory power of sale may be exercised after three months of default and 45-days notice to people with an interest in the property. Many mortgages also contain contractual power of sale rights, which may involve different terms and timing.
Because timelines and rights can depend on the mortgage terms and circumstances, homeowners should not wait until legal notices arrive before seeking advice.
Why Mortgage Debt Is Different From Credit Card Debt
To understand your options, it is important to know the difference between secured debt and unsecured debt.
Secured Debt
A secured debt is connected to a specific asset.
Common examples include:
- Mortgages
- Car loans
- Some lines of credit that are secured against the home
- Home equity lines of credit (“HELOCs”)
- Tax liens
- Property taxes
A mortgage is secured against your home. If mortgage payments are not made, the lender has legal rights against the property.
Unsecured Debt
Unsecured debt is not tied directly to a specific asset.
Common examples include:
- Credit cards
- Unsecured lines of credit
- Payday loans
- Personal loans
- Income tax debt (if there is no tax lien registered)
Consumer proposals and bankruptcies primarily deal with unsecured debts. The Office of the Superintendent of Bankruptcy explains that when a person files a bankruptcy or proposal under the Bankruptcy and Insolvency Act, a stay of proceedings stops most collection efforts for unsecured debts included in the filing.
Why This Matters for Homeowners
This distinction is very important.
A consumer proposal may reduce or restructure unsecured debt, but it does not change your mortgage contract. Your mortgage lender remains a secured creditor, and mortgage payments must still be paid directly if you wish to keep the home.
That means a consumer proposal may help your household cash flow, and free up money to make mortgage payments, but it does not directly erase the mortgage or any missed mortgage payments.
Debt Relief Options After Missing Mortgage Payments
The best option depends on your income, mortgage arrears, home equity, unsecured debt, and whether the mortgage is affordable going forward.
Here are the main options homeowners may need to consider.
Option 1: Catch Up Directly With Your Lender
If the missed payment was caused by a temporary issue, you may be able to catch up directly with your lender.
This may work if:
- The arrears are small
- Your income is stable
- The mortgage is affordable going forward
- You can repay the missed amount quickly
- You do not have a serious unsecured debt problem
Your lender may ask for a lump sum payment or may consider a repayment arrangement. This depends on the lender and your circumstances.
Option 2: Review Your Household Budget
Sometimes the mortgage is not the only problem.
The real issue may be that unsecured debt payments are consuming too much monthly income.
Review whether your budget is being strained by:
- Credit card minimum payments
- Payday loans
- Tax debt
- Unsecured lines of credit
- High vehicle payments
- Personal loans
- Collection payments
If these types of unsecured debts are making your mortgage payments unaffordable, a consumer proposal may be worth exploring.
Option 3: Refinance Carefully
Refinancing may help some homeowners, especially if there is enough home equity and the new payment is affordable with a reasonable interest rate and default charge terms .
However, refinancing is not always the best solution.
Refinancing may:
- Increase the total cost of borrowing
- Extend debt over a longer period
- Turn unsecured debt into debt secured against your home
- Put your home at greater risk if payments become unaffordable
Before refinancing your home to pay off credit cards, tax debts, unsecured lines of credit, or unsecured loans, it is important to ask whether the underlying debt problem has actually been solved.
Option 4: Consider a Consumer Proposal
A consumer proposal may help homeowners who can afford their mortgage payments but cannot afford to pay their unsecured debts.
A proposal may help by:
- Reducing unsecured debt
- Stopping interest on unsecured debts
- Stopping collection activity
- Stopping any wage garnishments
- Creating one predictable monthly payment
- Improving household cash flow
This may make it easier to focus on maintaining or catching up on mortgage payments and keeping future mortgage payments current.
Option 5: Consider Bankruptcy
Bankruptcy may be appropriate when unsecured debt is severe and a consumer proposal is not realistic.
Bankruptcy may help eliminate many unsecured debts, but homeowners must carefully review:
- Home equity
- Mortgage affordability
- Secured debts
- Household income
- Surplus income obligations
- Whether keeping the home is realistic
Under the Bankruptcy and Insolvency Act, the bankruptcy stay generally prevents creditors from pursuing claims provable in bankruptcy, but the Act also contains specific treatment for secured creditors. This is why a mortgage lender may still have rights against the property in a bankruptcy if mortgage arrears are not addressed.
Option 6: Sell the Home Voluntarily, If Needed
Selling the home may be the right decision if the mortgage payments are no longer affordable, even after other debts are addressed.
A voluntary sale may give the homeowner more control and allow the homeowner to obtain a higher selling price than waiting for the mortgage lender to sell the property under power of sale.
However, selling a home is a major decision. Before choosing to sell because of unsecured debt pressure, it may be helpful to speak with a Licensed Insolvency Trustee to determine whether a consumer proposal could reduce monthly debt payments on you unsecured debts enough to make keeping the home realistic.
Debt Relief Options Compared
| Option | May Help With | Important Limitation |
|---|---|---|
| Lender repayment plan | Catching up on missed mortgage payments or mortgage arrears directly with the lender. | Requires lender approval and enough income to keep up with both regular mortgage payments and any arrears repayment plan. |
| Household budget review | Identifying whether credit cards, payday loans, tax debt, or other unsecured debts are making the mortgage payment unaffordable. | May not be enough if the debt is already unmanageable or if income is no longer sufficient to cover basic expenses. |
| Refinancing | Consolidating debts, catching up on mortgage arrears, or lowering monthly payments in some cases. | May increase long term borrowing costs and turns unsecured debt into debt secured against the home. |
| Consumer proposal | Reducing unsecured debt pressure, stopping unsecured collection action, and creating one predictable monthly payment. | Does not erase mortgage arrears. Mortgage payments and arrears must still be addressed with the lender. |
| Bankruptcy | Dealing with serious unsecured debt when repayment is no longer realistic. | Does not stop a secured mortgage lender from enforcing its rights if mortgage arrears are not addressed. |
| Voluntary sale | Avoiding a forced sale process and giving the homeowner more control over timing and sale decisions. | May not be necessary if the mortgage is affordable once unsecured debt is restructured. |
Can a Consumer Proposal Help With Missed Mortgage Payments?
A consumer proposal does not directly reduce or erase mortgage arrears because your mortgage is a secured debt.
However, it may help indirectly.
If unsecured debts are making it difficult to keep up with the mortgage payments, a consumer proposal may reduce those unsecured debt payments into one manageable monthly payment.
This may free up cash flow so you can focus on:
- Keeping future mortgage payments current
- Catching up on arrears
- Paying property taxes
- Covering utilities and insurance
- Avoiding further reliance on credit
- Stabilizing the household budget
A consumer proposal must be filed through a Licensed Insolvency Trustee. The Office of the Superintendent of Bankruptcy states that Licensed Insolvency Trustees are federally regulated professionals who provide advice and services to people and businesses with debt problems.
Does Bankruptcy Help With Missed Mortgage Payments?
Bankruptcy may help with unsecured debts, but it does not solve missed mortgage payments.
A mortgage lender is a secured creditor. If you file bankruptcy but cannot maintain your mortgage payments or address the arrears, the mortgage lender is still able to continue mortgage enforcement.
Bankruptcy may still be appropriate in some cases, especially if unsecured debt is severe and there is no realistic ability to file a consumer proposal.
However, homeowners should speak with a Licensed Insolvency Trustee before making a decision. Bankruptcy can involve important considerations related to home equity, income, assets, and the affordability of keeping the property.
What Is Power of Sale in Ontario?
Power of sale is a legal process that allows a mortgage lender to sell a property if the borrower defaults on the mortgage and does not correct the default.
Many people use the word foreclosure, but power of sale is more common in Ontario.
Under power of sale, the lender may sell the property to recover the mortgage debt, interest, legal costs, and related expenses. If surplus money remains after the secured debts and costs are paid, the remaining funds may go to the homeowner.
Ontario’s power of sale process can involve formal notice periods, and the required timing can depend on whether the power of sale process is contractual or statutory. The Ontario government notes that statutory power of sale can apply after three months of default and 45 days notice, even where there is no power of sale clause in the mortgage.
Because power of sale can move quickly once the process begins, homeowners should not ignore letters or legal notices from the mortgage lender, lender’s lawyer, or mortgage servicer.
Common Mistakes Homeowners Make After Missing Mortgage Payments
Ignoring Letters and Legal Notices From the Lender
Avoiding the lender usually makes things worse.
Open every letter. Keep copies. Write down important dates. If a lawyer has contacted you, take the situation seriously.
Using Payday Loans or Credit Cards to Catch Up
Using high interest credit to catch up on the mortgage may feel like a quick fix, but it can create a larger debt problem.
If the mortgage is only affordable because you are borrowing from other sources, the budget may need deeper restructuring.
Paying Unsecured Debts Before the Mortgage
Credit cards, payday loans, and unsecured lines of credit are serious debts, but they are not secured against your home in the same way a mortgage is.
If you are choosing between paying unsecured creditors and keeping your mortgage current, it is important to get professional advice quickly.
Refinancing Without Solving the Debt Problem
Refinancing can clear credit card balances temporarily, but if spending, income, and debt payment problems continue, the debt may return.
This can leave the homeowner with both higher secured debt and renewed unsecured debt.
Waiting Too Long to Get Advice
Many homeowners seek help only after mortgage arrears, legal fees, collection calls, and stress have already escalated.
Earlier advice usually means more options.
Example: When Unsecured Debt Makes the Mortgage Unaffordable
An Ontario homeowner has a mortgage payment of $3,200 per month.
They also owe the following unsecured debt:
- $42,000 in credit card debt
- $18,000 on an unsecured line of credit
- $9,000 in income tax debt (no tax lien)
They recently missed one mortgage payment because too much of their income was going toward minimum payments on the unsecured debt.
After reviewing their situation with a Licensed Insolvency Trustee, they learn that a consumer proposal may allow them to combine unsecured debts into one monthly payment.
The proposal would not erase the missed mortgage payment. However, it may reduce the pressure caused by the unsecured debt enough to help them catch up on their mortgage and keep future payments current.
Every case is different, but this type of situation is common. Many homeowners do not have a mortgage problem alone. They often have an unsecured debt problem that is making the mortgage difficult to maintain.
When Should You Speak With a Licensed Insolvency Trustee?
You should consider speaking with a Licensed Insolvency Trustee if:
- You have missed a mortgage payment
- You are worried you may miss a payment soon
- You are using credit to cover living costs
- You are behind on credit cards, taxes, or loans
- You are receiving collection calls
- You are considering refinancing to pay unsecured debt
- You are worried about power of sale
- You have received a lawyer’s letter or notice of power of sale
- You feel like selling your home may be the only option
Speaking with an LIT does not mean you have to file a consumer proposal or bankruptcy. It means you can get clear, regulated advice about your legal debt relief options.
How David Sklar & Associates Can Help
At David Sklar & Associates, our Licensed Insolvency Trustees help Ontario homeowners understand their options when debt starts affecting their ability to keep up with mortgage payments.
Our team can review:
- Your mortgage payments
- Any missed payments or arrears
- Your unsecured debts
- Your household income
- Your home equity
- Your monthly budget
- Your legal debt relief options
The goal is to help you understand your options, what is realistic, what is legally available, and what steps may help you move forward.
If unsecured debt is making your mortgage unaffordable, a consumer proposal may be one option to explore. If the debt situation is more severe, bankruptcy may also need to be reviewed. Every recommendation depends on your specific circumstances.
Frequently Asked Questions About Missed Mortgage Payments
Will I lose my house if I miss one mortgage payment?
Not usually. One missed payment does not usually mean you will immediately lose your home. However, you should contact your lender quickly, confirm the amount owing, and make a plan to bring the account up to date.
Can a consumer proposal include missed mortgage payments?
Mortgage arrears are connected to a secured debt. A consumer proposal generally only deals with unsecured debts, so missed mortgage payments usually need to be addressed directly with the mortgage lender.
Can a consumer proposal help me catch up on my mortgage?
A consumer proposal may help indirectly. It does not erase mortgage arrears, but it may reduce unsecured debt payments, improve cash flow, and make it easier to focus on catching up with the mortgage lender.
Can bankruptcy stop power of sale?
Bankruptcy may stop many unsecured collection actions, but mortgage lenders are secured creditors. Bankruptcy does not automatically stop a mortgage lender from enforcing its rights if mortgage arrears are not addressed.
Should I refinance to pay off credit cards?
Refinancing may help in some cases, but it can also turn unsecured debt into debt secured against your home. Before refinancing to pay credit cards or other unsecured debts, it is important to review whether the debt problem has truly been solved.
What if I cannot afford my mortgage anymore?
If the mortgage is no longer affordable, even after reducing unsecured debt pressure, you may need to consider other options, including selling the home voluntarily. Before making that decision, it may be helpful to speak with a Licensed Insolvency Trustee.
Is a consumer proposal better than selling my home?
It depends on your situation. If the mortgage is affordable once unsecured debt is reduced, a consumer proposal may help you avoid selling. If the mortgage is not affordable long term, selling may need to be considered.
When should I contact a Licensed Insolvency Trustee?
You should contact a Licensed Insolvency Trustee as soon as debt payments begin affecting your ability to pay your mortgage or essential household expenses. Early advice may give you more options.
Get Advice Before the Situation Gets Worse
Missing mortgage payments can feel overwhelming, but it does not always mean you are out of options.
For many Ontario homeowners, the real issue is not only the mortgage. It is the pressure on the budget created by credit cards, tax debt, payday loans, lines of credit, and other unsecured debts.
A consumer proposal may help reduce unsecured debt pressure and create a more manageable monthly budget. Bankruptcy may be appropriate in more serious cases. In some situations, other options such as refinancing, catching up directly with the lender, or selling voluntarily may also need to be considered.
The most important first step is getting advice early.
If missed mortgage payments are connected to credit card debt, tax debt, payday loans, or other unsecured debts, David Sklar & Associates can help you review your options. A Licensed Insolvency Trustee can explain whether a consumer proposal, bankruptcy, or another solution may help you regain control.
