For some, the answer is to sell their house, and use the proceeds to repay their other debts. Unfortunately once you sell your house you no longer own a house, and in some cases in Kitchener it costs just as much to own a home as it does to rent, particularly if you have children or pets.
Theresa explained that there are two other options.
First, if you have equity in your home, it may be possible to re-finance your first mortgage, or get a second mortgage, and use that money to repay your other debts. If you are paying 18% to 25% interest on your credit cards, and can get a mortgage at say 6% or 7%, this strategy makes a lot of sense. You can lower your monthly payments, and more of what you pay each month goes towards the principal, and less to interest, so you pay off your debts faster.
But what if you have $50,000 in debts, but only $30,000 in equity in your house? A second mortgage won't be enough to get rid of your debts.
The second option is use the equity in your house to do a consumer proposal. For example, we could go to the people you owe money to and offer them a lump sum payment of $30,000, in exchange for writing off the balance of your debt. Theresa has had success in the past in getting mortgages for people who then use the money to do a consumer proposal. It's a good deal for you, because the consumer proposal deals with your debts and helps you avoid losing your house in a bankruptcy. It's also a good deal for your creditors, since they get more money than they would receive if you filed for personal bankruptcy.
This is not a simple procedure. An experienced mortgage consultant is required to find the appropriate lender and make it happen.
If you have equity in your house, and more debt than you can handle, feel free to contact Theresa Yates or contact us for more information.
posted by J. Douglas Hoyes, CA, Trustee @ 4:08 PM
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