September 5, 2017

It may not be exactly reflective of your situation but you’ll get the picture.

You moved from a larger city to the mid sized community of London Ontario for a better job and a more relaxed lifestyle. When you sold your house you realized enough profit to put a good downpayment on your new home.

You now have a house that is worth about $300,000 and you are carrying a mortgage of around $200,000.

A few years ago, after you had turned 60 you were injured, not at work but in such a manner that you could no longer work. You had no long term disability coverage and you didn’t qualify for EI, even though this was your first claim in your entire working life.  Not only that but you didn’t qualify for ($600 a month from) general welfare either, because you own a house. So you applied for your CPP and now you receive $600 per month in pension benefits.

From your enquiries you have learned that when you turn 65 you can claim Old Age Security and the Guaranteed Income Supplement raising your income to about $1,300 per month.

You are a proud woman, you have always been good with your money, you worked hard all your life and you raised your children as a single mom – you never missed a single bill payment.

Your mortgage payment is about $900 per month. Although you have ahd lines of credit and credit cards you have hardly ever used them and you have faith that something will happen to turn life around.

So as a “temporary measure” you decided to use credit to pay the mortgage and to cover other necessary household bills. Things went along just fine until you started maxing out after a couple of years and just before you could collect the GIS and OAS.

Eventually you will be unable to use credit to pay for credit and the creditors will call their loans then they will sue you in small claims court and place an execution (writ) against your property.

This type of scenario is becoming very familiar to bankruptcy trustees who can help people get out of debt but can’t help improve people’s income situtation. 

The answer?  Downsize early, minimize your lifestyle, stop using creit and pay your debts off!