Preconstruction condos disasters - GTA

It's a real mess out there, folks

I spent a large portion of last week meeting with people about presale condos that aren’t able to close now with rates having changed and values dropping in the intervening years.
I’m seeing people who ran into some serious bad luck. I’m seeing people who have simply succumbed to the monthly financial pressures of the cost of living that has increased dramatically. And I am seeing people who are greatly overextended in real estate. I’m also seeing mortgage to income ratios that at best don’t make sense (at worst are blatantly nonsensical).
We are able to help almost all of these people to extract themselves from an otherwise disastrous set of circumstances.
Any secured debt like a mortgage, 2nd mortgage, private mortgage or HELOC is eligible to be included in an insolvency proceeding (a personal bankruptcy or a consumer proposal) once the debt has changed to unsecured. That happens when a property is walked away from. IE, if you can’t close, you take your lumps (lost deposit, maybe get sued by the builder, as well, if they are willing to go that route.) Both the deposit and the lawsuit are unsecured debts, just like credit cards, tax debt, etc.
The solution is usually a period of tough acceptance – you go from your homeownership dreams to this when you really weren’t expecting it – but it is also a reset, a turnaround. It is almost always a chance to improve, but it takes a bit of time.
The Canadian insolvency code is both very efficient/summary in nature and very forgiving compared to other major western industrial jurisdictions (I won’t even put a name to that specific jurisdiction right now, thanks). I’ve been doing this long enough to have seen well past the period of the actual proceeding in hundreds (thousands?) of cases that I filed many years ago. Those people are all able to go about their financial lives as normal, functioning members of society (in terms of credit access). They took the hit, did the reset.
Stay tuned for examples of situations people are finding themselves in. These may be instructive for many. We’re going into a tough time and people should know what they can do.