Question (submitted by a reader): If your house is taken over by the bank, is your line of credit automatically paid off?
Answer: If you have a line of credit secured by your house (like a mortgage), and the bank forecloses on the house and sells it, the line of credit is no longer secured by the house, since the house is sold.
If the bank recovers enough money to pay off the line of credit, then yes, it is automatically paid off. However, if the bank does not get enough to fully pay it off, they can pursue you for the shortfall, which in some cases may require you to file a consumer proposal or bankruptcy to deal with the debt.
