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Tapping into the Equity in his Home – Warren’s Story

November 19, 2018

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Warren is a semi-retired salesperson. He sells a product that carries with it a long purchase cycle, so his commission cheques can often be scarce. Warren was confident in the product he was selling and truly believed he would see the results of his efforts within six months. Unfortunately, as Warren was building up his commission stream, he fell behind in his bill payments with just his pension income. As a result, Warren turned to credit to help pay his bills.

As time went on, Warren felt he was out of options. Quitting his sales job to find another would mean he would lose all the time and effort he had already invested building up his client base. It also meant he would lose out on the commission income just before it started rolling in. Selling his condo didn’t make sense, as Vancouver’s tight rental market would cost Warren more per month to rent than he would paying his current mortgage. Going further into debt was also not feasible as Warren’s existing creditors were no longer lending him additional funds due to his current financial state.

After weighing all his options, Warren decided to seek the advice of one of Smythe’s Licensed Insolvency Trustees. After assessing his unique situation, the Trustee used his network and contacted a mortgage broker that he knew worked with a wide variety of lenders.

The idea: help Warren get a new mortgage on his condominium which would terminate his existing mortgage, resulting in extra funds to help address his current financial situation.

The outcome: Warren would eventually use these funds to file a consumer proposal with his creditors, in addition to offsetting his living expenses for the next few months as his commission income grew.

In the end, Warren’s consumer proposal was a win-win situation. According to the terms of the proposal, Warren’s creditors would receive roughly 50% of what they were owed within 90 days as a lump sum payment. The creditors did not have to incur the costs of trying to pursue their typical legal remedies to try and get payment; nor did they have to try and force the sale of Warren’s home - an expensive, time consuming and risky proposition. Warren also benefitted, as he was able to compromise his debts, keep his condo and continue to pursue his commissioned sales opportunity.

The creditors voted unanimously in favour of Warren’s proposal and he is now on his way to living a debt-free future.

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