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equity in home

I am a single mother and I am about 55,000.00 in debt. I would like to pay my debts and would be able to do so over time, but the interest is killing me. I own a home of my own and in Alberta the housing market is so high that the value of my home went from 237,000.00 to 417,000 with me still owing 199,000.00 on the mortage. Obviously I have over 40,000.00 in equity, as I own this home on my own. If I wanted to file a Consumer Proposal and was willing to pay back 100% of my debt over 3 years, is that something that could be done? I have tried to get a loan to avoid this but was not successful. Is this something that would be accepted by most creditors? Any info would be appreciated

At The End of My Rope

One Response to “equity in home”

Barton Goth GCO Bankruptcy Trustees said...

There are a few options in your situation. The fist is a standard home equity loan (i.e. second mortgage) for the full balance of your debt. This will likely be one of the cheapest and most likely alternatives.

If you cannot qualify for this home equity loan the next program I would investigate is Orderly Payment of Debt. This is a program that is run by Credit Counselling Services of Alberta and is similar to a consolidation loan (i.e. debts are paid i full) and you make payments over a 3 or 4 year time frame. The downside to this option is that it will have a negative impact on your credit rating and the payment will likely be substantial (as paying $55,000 over a 4 year term will be no simple feet). But when comparted to a propsal it will have the same impact on your credit and the administration costs will be substantially less. The only thing that I am concerned about is whether or not they would accept you, historically they have been unwilling to work when there are substantial assets involved, but as you alluded to it has been interesting times in Alberta as of late so it is worth at least a phone call to confirm.

If Credit Counselling Services is not willing/able to help out then you can definately do a proposal over a 3, 4 or 5 year term. This proposal can be phrased so there is no impact on your house and that the debt will be paid 100% (in fact we did a similar proposal to this last week here in Edmonton).

As you can tell the first thing I would recommend is calling Credit Counselling Services of Alberta, if that doesn’t work then you should explore the proposal option more by contacting a local trustee directly.