How to Survive Bankruptcy and Foreclosure

Is it possible to survive bankruptcy and foreclosure ?

Seems like a tough hill to climb. Here’s how one couple did it and came out on the other side stronger. The following is a guest post by Jessica Bosarii. She writes for Billeater.com, a site devoted to providing helpful money-saving tips beyond the obvious. You can read about home finance and mortgage at the site.

I marvel at how my husband and I have managed to make our marriage work over the past 10 years. Our Pilgrim’s Process has been a journey from the pressures of excess to the pleasures of having less. Our shared pain, brought about from the recession, has turned two people who were constantly at odds into one couple who shared a deeper love and respect for each other.

At the start of our journey, my husband and I bought a house on the water’s edge in Plymouth, MA, overlooking Cape Cod Bay. I reluctantly agreed to the purchase. He presented this move as something he needed to do. Being newly married, I did not have the confidence to hold my ground on our very affordable mortgage. I acquiesced only after much fretting and fighting.

And at first things were fine. I expected to have some difficulty. We had to live in a poorly insulated house for about a year that felt like living in a Maine log cabin. The remodeling process was difficult and frustrating, especially with a toddler to raise. And having to live in three different temporary locations over six months while the work was being done, we fought. Boy did we fight. When the remodel was complete, it seemed that everything might be okay. But I forgot how opposite we are.

My husband likes to always be striving for bigger and better challenges. I like to just chill and try to be as happy and satisfied as I can, regardless of circumstances. I don’t care about how big our house is or how much money we have. I just want to live simply and make enough to get by. He gets excited by challenges that can result in big payoffs. Of course, you need to take big risks to get big rewards, and those risks can also lead to huge debts.

After settling into the house, it became clear that we had bitten off more than we could chew. Rather than making the house just big enough for our son and us, we made it into a four-bedroom. The cost of maintaining such a large home was huge. Year after year I approached my husband about our budget not working…we were getting further behind every year. He believed I was just being anxious and everything was fine. Showing him the numbers was no help. Offering to split our finances was no help. Nothing worked.

So when we found a remodeling project on the same street where we lived, we both agreed to it right away. I thought that the profit would allow us to pay down our mortgage to a more manageable level, letting us have a manageable budget. I thought he wanted it for the same reason too, but it turned out that he just wanted the challenge. He had dollar signs in his eyes. Despite this, things started out well. We agreed to make minimal improvements to the house to make it salable, turn it around quickly and use the profit to pay down our mortgage.

But thinks took longer and cost more than we expected. The builder we brought in put stars in my husband’s eyes and the project costs skyrocketed. We fought and fought over costs until I finally just put my head in the sand, thinking that at least we could still sell for a small profit. Then the market crashed.

Unable to sell the project house, we saw that bankruptcy was becoming inevitable. At the time, I thought bankruptcy would be the end for me. I had perfect credit all my life. I worked hard at it and was proud of my achievements. I saw that staying with him was hurting me. His terrible attitude towards money was bringing us down, and I did not want to go down with the ship.

In a serious conversation, he finally agreed that he would stay within the budget I prepared…that our monthly payments would be no more than our budget allowed. From here on out, he would allow me to dictate our spending budgets. That’s the only thing that made me stay. Because our primary residence was upside down at this point and the project house wasn’t selling, the next step was to file for bankruptcy rather than wait for everything to fall down around us.

The actual bankruptcy process wasn’t all that bad, and when we came out the other side, suddenly we had common goals…rebuild our credit, get a home we can afford, keep our family together. Eventually, he even conceded that we could live in a rental for a while if it became necessary. He finally understood that we would lose our home and that keeping our family together was more important than where we lived. We had to start over, and this time we saw things from a similar perspective.

It took a long time for the foreclosure to take place on the project house and finally in the house where we live. Our mutual hand-wringing and common worries allowed us to lean on each other. When I couldn’t take the stress anymore, he was the strong one. When he started to lose his cool, I made sure I was there for him. We offered reassurances to one another, building a common bond and deeper love for one another.

When the project house finally sold at auction, the buyer had second thoughts. A friend was able to step in and buy the house and now rents it back to us. Our own home, alas, would not be saved, barring a sudden act of common sense by the mortgage holder…and there has been none of that, so none is expected.

So right now, we’re holding our breath, waiting until we have to leave the home we built together. We’ve set up an agreed exit date for our home with the bank and we’re working to get the other house ready. Instead of arguing over getting everything perfect, we are united in the blessing of being able to stay in the same neighborhood and get a brand-new house with a lower mortgage payment out of the deal.

Our new, tempered perspective comes from a trial by fire. We count our blessings instead of our unfulfilled desires. We have our kids and a home to live with them in. We have the same neighbors we love like family. And we have a deeper love and respect for each other.

We hardly fight at all anymore, and I can’t remember the last time I felt the desire to smash him in the head with a frying pan. The trick from now on will be to remember what was, what could be and to keep respecting each other’s wishes, even when they conflict. This tells me that the recession was the best thing that ever happened to our marriage. The worst that could happen has turned out to be the greatest blessing of our lives.

Thanks for the inspiring story, Jessica. Have you faced these kinds of difficulties? How did you and your spouse deal with it?