It was his dream home. I remember the look of pride on his face as he showed my wife and me around. After years and years of hard work and raising 3 children, they were finally comfortable.

The house was nothing extreme by many people’s standards. Four bedrooms, two bath…hardwood floor throughout. All the furniture and appliances were brand new, including the flat screen TV. In the morning, the sunlight would sparkle off the water from the lake in the back yard. Maybe this was not a wealthy mans home, but for my friend, he had finally found a place of peace.

That peace was to be short lived. You see, the Florida housing boom had been in full effect for several years. He was able to afford the mortgage due to the fact he had worked for his employer long enough to draw both his salary and pension. It was a good deal for him. He had more than enough money to live there in comfort and, one day, he could sell his previous home and have more than enough to support his lifestyle on his pension alone.

Unfortunately, after he moved in, his job pulled his pension, seriously dropping the amount of monthly income he had to work with. He was okay for the moment, but more money was going out than coming in. It doesn’t take a rocket scientist to realize that that trend cannot last forever.

Then it happened, I got a phone call informing me he was in the hospital……he had major heart attack. So severe was this heart attack that it would forever affect his way of life. His doctor told him that there was no way he could return to work again. If he did, it could kill him. Having now lost both his incomes, there was no way he could afford the mortgage payments.

I guess he needs to sell the house, right? If only it was that easy. As we are all aware, the housing boom in Florida is over. Prices are plummeting and homes sit on the market for 6 months or more before someone makes an offer many thousands of dollars under asking price. His house is no longer worth what he owes. Due to no fault of his own, he cannot afford the house and he cannot get rid of it. The dream has become a nightmare.

We sat at the hospital discussing options. There did not seem to be very many good ones.

He could try to refinance. Perhaps he could get a lower payment that would buy him some time. However, since he did not have an income anymore, what bank is going to lend him money?

He could separate his debts from his wife’s. Keep her credit clean, and then stop making payments on his unsecured debts. His credit would be destroyed, but hers would remain intact. And again, it was a major heart attack; it’s very possible that he won’t be around much longer. This approach could possibly ensure the best future for his family. Unfortunately, his credit simply is not good enough to refinance everything under his name without his wife cosigning. Even if it was, he has lost his entire income. He couldn’t get the loan regardless of his credit score.

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