Dear Liz: My husband and I both lost our career jobs over the last two years. Since that time we have done everything to try to stay afloat, including borrowing more money on our credit cards, borrowing from our home equity credit line and liquidating our retirement accounts.
We have continued to interview while working $12-an-hour jobs, but now face not being able to borrow any more money. With the current government aid going to those needing mortgage help, should we stop paying on our first and second mortgage or stop paying on our other bills? We could probably make it if we could refinance, but without “real jobs” and enough income to cover our debts today, I would not think we would qualify.
Answer: You’re probably right. The days of people getting mortgages without being able to document sufficient income are over.
You understandably hoped for better days, but by refusing to drop your expenses below your income you’ve essentially squandered your retirement and borrowed yourself into a corner.
You still may have some options. The Homeowner Affordability and Stability Plan announced by President Obama does not require that you default on your mortgage before you can get help. You should contact a housing counselor approved by the U.S. Department of Housing and Urban Development to review your options. You can find referrals to HUD-approved counselors from a link on the department’s home page, www.hud.gov.
But you also should talk to a bankruptcy attorney. Having to choose between paying your mortgages and paying your other bills indicates a debt load that may be too high even if you do get mortgage relief.
Actually, you should have consulted a bankruptcy attorney before you touched your retirement accounts or home equity. Those assets could have been protected from creditors and you at least could have emerged from this crisis with something for your future.
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