I write the Storm Preparation series for those folks out there who are considering bankruptcy but just aren’t there yet. I know they are out there because they tell me – usually weeks and months after following this blog (and doing their own research and homework) and getting the courage (or in some cases a summons to appear which prompts them) to call. This week’s blog is for those out there who are considering chapter 13 in order to save their home. And it’s specifically for some of the people out there who are struggling with the very real and undeniably painful prospect of losing their home. So when I say “you”, that’s who I am speaking to.
For the last several years, our financial system has been propped up with (to steal a quote from Elizabeth Warren) ‘chewing gum and bailing wire.’ Our economy grew because homes became ATMs (we also had a war…or two…but that discussion is for another day…and maybe another blog). Some people used their ATMs to acquire luxuries. But not everyone used their home equity to buy those high end items. Others used it for necessities. Others like you.
When I say “necessities”, I am not talking about the necessity of traveling to Bora Bora every winter to prevent the winter doldrums and to ensure that you receive all the Vitamin D that Mother Nature can provide. I’m talking about your need for food, utilities and medicine. I am talking about your day-to-day expenses.
Why did you take cash out of your home equity for basic stuff? The easy answer is this: you had to. Perhaps you were not working – but hoped to get a job in the near future. Perhaps you left your job on bad terms and encountered some difficulty (for whatever reason) in getting a new job. Perhaps you or your spouse (or one of the kids) got hurt or sick and had to go on disability, or you had to stay home and take care of them. Fortunately you had your house you could tap into – and if you’re like many of my clients, you were on a first name basis with a mortgage broker.
You refinanced – perhaps over and over again. With each refinance, a little cash was taken out. With each refinance the closing costs ate away at the equity. And each refinance bought a little more time. More time to find a job and more time to hope and pray that things got better. And things did get better. Briefly. And when they got bad again, you refinanced again. Or perhaps you find yourself in a different place today: unable to refinance, and knowing that things have not gotten better and feeling awful about all of it.
Does that mean you do not have a legal dispute with your lenders? Not necessarily (but it’s better to find out now, rather than later). Does that mean I now think that much like today’s pop music home lenders are merely misunderstood, and do not deserve the public and financial flogging they are now getting? Nope, they deserve it. Big time.
But let me ask one practical question: if you didn’t have the money from the refinancing, were you still going to be able to get by? If the answer is “no”, then please know this: you did what you had to do and you have nothing to be ashamed of.
And if you’ve gotten this far into this blog and you’re still saying “by golly, he’s talking about me!” then I am afraid that chances are you are running out of options. It is time to move on to the next stage in your life, whatever that may be. More than likely, it will not be in the place you have called “home.” And that really is okay….on one condition: that you let me know that it’s really okay.
Not an easy – or particularly upbeat topic today. And it’s not an easy thing to have to face either. I know. I’ve met with folks who have not reached the “okay” stage. I’ve had to deliver these facts in person, face to face. When I’ve had to deliver this news, almost everyone who has been on the other side of the table has given me cues that they have a voice in there telling them the same thing: they know that there are few options, but they hope that I can prove how wrong they are. They hope there is something I can tell them that will quell their fears and concerns; that I can pull a rabbit out of my magic-bankruptcy-lawyer hat. For some folks, I can’t. And there is no good reason other than I just can’t. And I believe that it may be better to read about that here – in your home, office or cubicle where you can digest it on your own terms.
Storm Preparation is a weekly series appearing on Wednesdays and offers thoughts, tips and information to people who think they may need bankruptcy protection in the future. Questions, comments or suggestions can be addressed to email@example.com.
- Storm Preparation: Acceptance
- Storm Preparation: Some Thoughts on What We Can Do
- Storm Preparation: Depression
- Storm Preparation: Stage One, Denial
- Storm Preparation: Plan B
Tags: Storm Preparation