“We’ve always used our line of credit to pay our bills and credit cards. We’d then refinance our mortgage to pay off our line of credit. We’ve never had trouble making our mortgage payments so we were a little surprised when the bank told us we don’t qualify for our usual refinancing. Now we’re not sure what to do because our credit line is maxed and it’s only a matter of time before we can’t afford the payments. Help!”
– from ‘Living within your means; Deal with debt by budgeting and consulting a professional’, The Province, 3 July 2012 [Hat-tip Alexcanuck and too much debt]
See the whole article for the suggestions from the credit counsellor. Excerpts:
“Anyone with a mortgage insured by Canada Mortgage and Housing Corp. cannot owe more than 80 per cent of the value of their home when they refinance their mortgage. This change will affect countless people who have been relying on their home as a money tree.” …
“If you don’t have enough money to make all of your payments, start seeking help to consider other debt consolidation options. There are a number of debt consolidation options our credit counsellors discuss with clients every day. These include loans, mortgage refinancing when possible, credit counselling repayment programs, settlements and consumer proposals.
If clients have assets they can sell it may be worth cashing in some investments. They may also be able to use their home to generate a little extra income.”
These guys have been living off ever increasing debt, and now they are puzzled and perplexed when they hit the inevitable wall. Are there really “countless people” out there this foolish?
Also, note that the advisor doesn’t mention selling their home and renting or downsizing. Probably because they have so little equity in it, it’d not solve anything.