I recently met with a couple in our Kitchener Hoyes Michalos bankruptcy office. They are a hard working couple, however she was laid off from her job about 18 months ago. When the second income disappeared they began using credit cards to pay regular monthly living expenses, hoping that she would soon find a job. The job never appeared, and now they have accumulated more debt than they can handle.
They own a home, but between the first mortgage and the second mortgage (which they were forced to take with a high interest lender) their living expenses including their mortgage payments are nearly 80% of their household income. Needless to say, many bills were going unpaid.
They also have $36,000 in various credit card debts and the creditors are starting to call. Things are starting to unravel. This situation is a clear example of just how fast a stable financial situation can come off the rails. Together we looked at their situation and it became very clear that the house was a big problem. There was little to no equity left in the house. It was nothing more than a huge money sucking problem.
This couple have been doing without even some of the simple necessities of life to wrestle with their debt. In their case walking away from their home would mean a substantial improvement in their quality of life. Instead of paying out 80% of their income to put a roof over their head, they could now look forward to putting nearly $700 a month in the bank to save for their future, a prospect that was simply impossible for the last several years.
No one wants to file bankruptcy, but sometimes in some situations it really is the best option to protect your future, the key is to recognize the warning signs.
If you are struggling with debt and you can’t see a way out, it really is in your best interest to look at your options. Maybe personal bankruptcy is not the right option for you, but without all the information you may not know what the best option is.