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[OP]
Newbie
Nov 25, 2013
17 posts

Drowning in Debt

I currently have about 50,000 in consumer debt. I admit it is out of stupidity and careless spending. I haven't missed any payments but have only been paying minimum payments on all cards. What would the best option for me I am not looking for a easy way out bit at the same time I want to know the payments I am making is actually making an impact to the amount owing. I do own a house for 2 years.
78 replies
Deal Expert
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Jan 27, 2004
45424 posts
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T.O. Lotto Captain
Consider a refinance or home equity line of credit if there is enough equity in your home.

Not enough equity? Depending on the interest rate of your credit cards, you might be well off with a 2nd mortgage. a 9% interest rate second mortgage is way better than 20-30% credit cards...
Deal Guru
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Mar 23, 2008
12211 posts
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Edmonton
You need to look at your budget. Your income, your spending, and how much you're paying on your debt. Until you get the information, you'll just be making useless guesses.

A HELOC might help, but if you don't fix what caused the problem in the first place, you'll be back here in a couple of years with a $50k HELOC AND 50k in consumer debt...

C
Deal Addict
Dec 21, 2011
3425 posts
637 upvotes
London
Can you sell any of the stuff you racked the debt up on and put a few grand off the highest interest debt to start?
[OP]
Newbie
Nov 25, 2013
17 posts
UrbanPoet wrote: Consider a refinance or home equity line of credit if there is enough equity in your home.

Not enough equity? Depending on the interest rate of your credit cards, you might be well off with a 2nd mortgage. a 9% interest rate second mortgage is way better than 20-30% credit cards...
I have never run into this situation before where / how would I apply for a 2nd mortgage?
[OP]
Newbie
Nov 25, 2013
17 posts
snow00774 wrote: Can you sell any of the stuff you racked the debt up on and put a few grand off the highest interest debt to start?
Not really to be honest
[OP]
Newbie
Nov 25, 2013
17 posts
CNeufeld wrote: You need to look at your budget. Your income, your spending, and how much you're paying on your debt. Until you get the information, you'll just be making useless guesses.

A HELOC might help, but if you don't fix what caused the problem in the first place, you'll be back here in a couple of years with a $50k HELOC AND 50k in consumer debt...

C
Trust me once I figure out how to get out of this debt I will not be here again it was just plain supidity on my part
Deal Guru
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Mar 23, 2008
12211 posts
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Edmonton
Tbaijoo wrote: Trust me once I figure out how to get out of this debt I will not be here again it was just plain supidity on my part
So now go back to the first question... What's your income, what are your monthly expenses like, and how much are you paying on your debt? At what interest rates?

You can talk to your bank about a HELOC. That's likely the most effective way to bundle your debt together and deal with it cost effectively. But that will depend on you have at least 50K more than 20% equity in your house. For the sake of round numbers... If your house is worth $800,000 (actual appraised value), your maximum HELOC + mortgage together will be $640,000 (80% of appraised value). Take $50k off that, means $590,000. So you must have more than $210,000 in equity in your house ($800,000 - $590,000 = $210,000).

You can speak to a mortgage broker or your bank about a second mortgage.

C
Deal Fanatic
Nov 24, 2013
6214 posts
2963 upvotes
Kingston, ON
Tbaijoo wrote: I have never run into this situation before where / how would I apply for a 2nd mortgage?
You don't necessarily want a "2nd mortgage" which can be a higher interest product. Start with refinancing through your mortgage lender, or applying for a HELOC (which can be with your lender or other lenders, depending on how your mortgage is setup).

Two things that will help give people an idea:
-How much do you currently owe on your mortgage? Not what you paid for your house but the latest balance
-How much are similar houses in your neighborhood worth? You can check asking prices on Realtor.ca for an idea

Generally, you can refinance up to 80% of your home's value. If it's worth $500,000 now, but you only owe $350,000, you can refinance up to 80% of $500,000, which is $400,000, meaning you'd get the $50,000 you'd need to clear your debts.
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Nov 2, 2013
5533 posts
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Edmonton, AB
(1) second job
(2) sell some of the stuff
(3) HELOC
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Deal Addict
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Sep 9, 2012
4334 posts
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Oakville, ON
Tbaijoo wrote: I have never run into this situation before where / how would I apply for a 2nd mortgage?
How much is outing on your mortgage? And how much is your house realistically worth?

Tell us these things and we can advise on the feasibility of some kind or mortgage financing or rule that out and go down a different approach/path.
Deal Addict
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Mar 31, 2009
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MBNA 0% credit card if you can get one, take the biggest 0% balance transfer you can, and pay off your other cards that have the highest interest.

If you've faithfully made payments, I doubt they'd turn you down.

At that point, you can either do the logical thing and try to pay down the remaining cards a bit faster while making minimum payments on the MBNA card - or you could try to pay the most you can against the MBNA card because you'll get the good feeling of making progress, since you know interest on it is 0% so every payment you make is decreasing your debt.

If all else fails, sell your house and rent.

Probably the refinancing idea is your best bet though. Assuming you have some equity built up.
Deal Addict
Apr 4, 2013
1274 posts
407 upvotes
Tbaijoo wrote: I currently have about 50,000 in consumer debt. I admit it is out of stupidity and careless spending. I haven't missed any payments but have only been paying minimum payments on all cards. What would the best option for me I am not looking for a easy way out bit at the same time I want to know the payments I am making is actually making an impact to the amount owing. I do own a house for 2 years.
Why are you only making minimum payments? Is it because that is all the money that you have or is it because that is simply what you do?

What type of consumer debt is it? Is a combo student loans/auto loans/credit cards? Different debt has different options.

There are no quick fixes for getting out of debt. It's hard. You have to drastically cut back on your spending and for most, this means a major change in lifestyle. You have to cut back so you not only stop going into debt but that you also find the money to pay down the debt.
Deal Addict
Aug 31, 2014
1488 posts
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YVR, BC
how did you accumulate 50k consumer debt?

2nd job and cut spending
Deal Fanatic
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Jan 27, 2007
5079 posts
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Peterborough
How did you get a mortgage with that much debt in the first place?

If debt came after the house, then you need to sell it. You can carry the debt.
[QUOTE]I know you are, but what am I.... ;) [/QUOTE]
Sr. Member
Mar 3, 2015
699 posts
95 upvotes
Scarborough, ON
Option 1: Contact your mortgage provider to get 50k loan against your house. And pay all debts in full but u must negotiate to minimum amount each account. Be greedy and cheap!

Option 2: Contact (Credit Canada Debt Solutions)

Option 3: Is to declare bankruptcy and free yourself. This option is last solution and only if u don't have house single and don't give a toss anymore. No shame I declared bankruptcy one time right after high school because I maxed all my first credit cards and used for all fun in travel to Europe. No regrets used them corporate greedies and dumped them.
Newbie
Jun 14, 2016
42 posts
33 upvotes
I was in a similar situation about 18 months ago. I had $65k in credit card debts and I didn't have the 20% home equity needed for a 2nd mortgage or a heloc.

The first thing I did was lock in my mortgage for 5 years, then I filed a consumer proposal. The debt was reduced to $21k. After the first year of paying 0% interest on the proposal, I got a line of credit in my wife's name to pay off the remaining $16k. The derogatory will remain on my credit report for 3 years from the time it was paid off, but by the time my mortgage is due for renewal the consumer proposal will be gone from my credit report.

Since I filed the proposal, my home value has gone from $415k to around $570k (I live in Greater Vancouver). If I had known that was going to happen, I probably would have just waited and got a 2nd mortgage. I guess hindsight is 20/20.
Deal Fanatic
Nov 22, 2015
5781 posts
5284 upvotes
supertronic wrote: Option 1: Contact your mortgage provider to get 50k loan against your house. And pay all debts in full but u must negotiate to minimum amount each account. Be greedy and cheap!

Option 2: Contact (Credit Canada Debt Solutions)

Option 3: Is to declare bankruptcy and free yourself. This option is last solution and only if u don't have house single and don't give a toss anymore. No shame I declared bankruptcy one time right after high school because I maxed all my first credit cards and used for all fun in travel to Europe. No regrets used them corporate greedies and dumped them.
It's unlikely that OP has enough equity for a loan when he's only 2 years into home ownership. His only option may be a second mortgage.

Options 2 and 3 are terrible ideas. A proposal or bankruptcy would stay with him for the next 7 years. Not a good option since OP doesn't really have that much debt - sounds like he's just house poor.
Deal Fanatic
Nov 22, 2015
5781 posts
5284 upvotes
I think your best bet is to just sell the house and rent until you can pay everything off. It sounds like you jumped into home ownership too quickly. Banks are quick to approve everyone at maximum TDSR - I see so many people with 5% down and nothing else saved for expenses/bills/property taxes. They usually end up crushed by debt and forced to sell their homes.

I always tell people to save up closer to 30% of the house value as a DP as it's much more realistic.
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Sep 8, 2007
9017 posts
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Way Out of GTA
supertronic wrote: Option 1: Contact your mortgage provider to get 50k loan against your house. And pay all debts in full but u must negotiate to minimum amount each account. Be greedy and cheap!

Option 2: Contact (Credit Canada Debt Solutions)

Option 3: Is to declare bankruptcy and free yourself. This option is last solution and only if u don't have house single and don't give a toss anymore. No shame I declared bankruptcy one time right after high school because I maxed all my first credit cards and used for all fun in travel to Europe. No regrets used them corporate greedies and dumped them.
Yeah its corporate greed to lend you money to go blow in Europe. Hope the 7 years was fun. Terrible advice.

This is the problem with public forums any whack job can give advice.

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