Our Rental House is Sliding Underwater. I Don’t Want to Rob our Retirement Anymore. – Thomas

“Dear Steve,

I am 52 yrs. old. I worked at the same company for 25yrs., They down-sized, and in Jan. 2009 I was laid off. Since that time, the work I have been able to find is as an independent sales rep with a small start-up. Commission only, very little money. I have also received some unemployment insurance.

When times were good, my wife and I attempted to bolster our retirement nestegg by investing in real estate. We bought a 2nd home in Merced,CA hoping to rent it or sell. Before we could finish upgrading it, the bottom fell out of the market. We did rent it for awhile, but monthly mortgage vs. rent was completely upside down. Finally was foreclosed on.

What compounds the misery is that we used quite a bit of our euqity line to pay for remodel/upgrade. We already had an outstanding balance on the credit line before beginning the work. Today, in our current financial bind, we feel completely trapped.

Until a found your website today, I have been experiencing many of the very feelings you write about. I cannot see a way of ever getting out from under this obligation to the creditor of the equity line. They have restructured the loan to lower the payment, but there is no way I am making any progress toward paying it off. We are only paying interest.

Of course, we also have a couple of much smaller bills. After reading today, I realize I have been doing things wrong, but I have to tell you, we have taken from our retirement to stay ahead of bills. I don’t want to do that any more, but don’t know what to do. We really want to avoid bankruptcy if possible.

What are the ramifications of discontinuing payment of the equity line? I want to stop raiding my retirement, and to continue to be able to pay my mortgage.

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Is it possible that I could be forclosed for such action?


Dear Thomas,

It is unlikely they would foreclose but you may get a huge tax bill for the forgiven debt and you can be sued for the debt.

It seems like the issue here is not ruling out solutions, but ruling options. Ultimately where I need for you to be is to reverse the never ending slide down and take some action that will give you a chance at building a better future.

The first stop in this situation should be for you to talk to a local bankruptcy attorney. Do that and then come back and post a comment and let me know how you feel about bankruptcy after the meeting.

You can click here to find a local bankruptcy attorney and if you’d like a second opinion about your situation or a personal consultation by another debt coach, please feel free to contact Damon Day.

Please post your responses and follow-up messages to me on this in the comments section below.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

Do you have a question you'd like to ask me for free? Go ahead and click here.
Damon Day - Pro Debt Coach

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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