What Happens When You Fall Behind on Debt Payments? Writs, Mortgages, and Power of Sale in Ontario
If you’ve fallen behind on your mortgage or other debts in Ontario, you may be facing serious financial pressure—and wondering what happens next. Will you lose your home? Can creditors force a sale? What happens if your house doesn’t sell for enough to pay everyone?
This article provides a summary of Ontario’s legal framework for mortgage enforcement and debt collection involving real estate. It focuses on what debtors—especially property owners—should know when they’ve defaulted on payments and are at risk of legal action, including writs of execution, mortgage defaults.
This article is not legal advice, but it can help you understand what to expect and why it’s important to get legal support early.
What Can Creditors Do?
If you default on a loan or court-ordered payment—whether it’s a mortgage, a credit card, or support order—the creditor can try to collect. If you own real estate, your home may become a target for debt enforcement, even if the debt is not secured by a mortgage.
Creditors may enforce unpaid debts in two main ways:
1. By registering a writ of seizure and sale (for unsecured debts, like credit cards or judgments)
2. By enforcing a mortgage (if the debt is secured against your property)
Either process can affect your property. If the debt remains unpaid, you may be forced to sell or have your home sold under power of sale.
Secured Creditors: Power of Sale vs. Foreclosure
Foreclosure
Foreclosure is a court-driven process where the lender takes ownership of the property in satisfaction of the debt. It extinguishes the borrower’s interest in the property but is rarely used in Ontario due to its complexity, costs, and finality.
Power of Sale
Most lenders in Ontario use power of sale, which lets them sell your home without going to court, provided they follow the rules under the Mortgages Act.
What You Can Expect in a Power of Sale:
1. Notice of Sale – You’ll receive a notice after you fall into default. You usually have at least 35 days redemption period to bring the mortgage up to date.
2. Redemption – You can stop the sale by paying the missed payments, interest, and legal fees.
3. Sale of Property – If you don’t catch up in time, the lender can sell your property.
4. Money from the Sale is used to pay (in order):
o Legal and real estate selling costs.
o The first mortgage lender.
o Any other mortgage or lien holders.
o Any registered writs of execution from other creditors.
o You, if there’s money left over.
If there’s not enough money from the sale to cover your mortgage, the lender may sue you for the difference/deficiency, unless the mortgage contract or law prevents it.
What If You Have More Than One Mortgage or Debt?
Secured creditors - If you have multiple charges registered against the property, the first chargee, often a lender, gets paid first. A second and/or subequent charge(s) only gets paid if there’s money left. If the money is not sufficient to cancel all the debts, such a second mortgage, that lender might also sue you personally for what is left unpaid.
Unsecured creditors—like those with a writ of seizure and sale—are at the bottom of the list. They only get paid if there’s money left after all mortgages and statutory claims (like unpaid property taxes) are satisfied.
Can You Fight Back or Delay the Sale?
Yes—borrowers still have rights:
· You can redeem the mortgage any time before the sale by paying off what’s owed.
· You can challenge the process in court if:
o The lender didn’t follow the legal steps
o The property was sold for less than fair market value
· You may be able to negotiate a settlement or extension before the sale goes through.
Writs of Execution: What They Mean for You
Governed by the Execution Act, these writs are enforceable once registered with the appropriate sheriff’s office. In Ontario, a writ is registered against an individual, not directly against a property. If that person owns real estate in the jurisdiction where the writ is filed, it can encumber their interest in the property but does not permanently bind the property itself.
The registered writ allows a judgment creditor to claim proceeds from the sale of a debtor’s real property. However, registration alone does not guarantee payment. Writ holders are paid only after secured claims and statutory liens have been satisfied. When the available equity is limited, unsecured creditors are often left with no recovery. Therefore, the registration of a writ does not guarantee payment. It only gives the creditor a position/seniority with regards to other creditors.
What that means for home owners:
· If your home is sold (voluntarily or by power of sale), any equity you have may go to pay that judgment.
· If there’s no equity, they may not get paid—but they can still try to collect through:
o Wage garnishment
o Bank account seizures
o Other enforcement options
Judgments and writs remain enforceable for years unless they’re satisfied, expire or renewed.
What If You Co-Own Property?
If you co-own your home (for example, with a spouse), and only you owe the debt, the creditor can only go after your share of the equity. The co-owner’s interest is not affected unless they’re also a debtor.
Key Takeaways for Debtors in Default
· Falling behind on debt payments can put your home at risk, but you still have rights.
· The power of sale process must follow strict legal rules. Lenders must try to get fair market value and provide a full accounting of the sale.
· Even if your property is sold, you may still owe money if the sale didn’t cover all debts.
· Unsecured debts and writs don’t disappear—they can follow you even if your home equity is gone.
· If you act early, you may be able to stop the sale, refinance, or negotiate a settlement.
Indeed, Ontario’s legal framework strongly protects the rights of secured creditors and provides structured enforcement tools for unsecured claimants. Creditors have powerful remedies at their disposal—but debtors also have time-sensitive rights: the right to respond, redeem, and challenge improper enforcement.
When home equity is limited, sale proceeds are applied in a strict order, and often only the top-ranking creditors—such as first mortgagees or statutory claimants—are fully paid. Others may recover little or nothing.
Falling behind on your debts can feel overwhelming—especially when your home is at stake. A power of sale doesn’t just result in the loss of your property; it may also leave you exposed to further legal action if the sale proceeds don’t cover the debt in full.
This article is a summary only and not legal advice. Every situation is different, and a delay can make a big difference. If you're dealing with debt enforcement or worried about losing your home, speak with a lawyer as soon as possible to understand your rights, explore your options, and make informed decisions.
The Six Law Group
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