Like many people, Luke (73) and Jill (70) got hammered in the recession. Luke ran the restaurant that he and Jill owned and Jill had a job in the medical field. When the economy turned, the income from the restaurant dropped significantly. They pushed through for as long as they could, spending everything they had saved for retirement, but eventually they had to file for bankruptcy.
Because of the amount of equity in their home, they had to file for Chapter 13 bankruptcy. They made their payments to the trustee faithfully for 4 years, at which point the bankruptcy was discharged in May of 2016.
They both wanted to retire. In fact, the restaurant is for sale and Jill’s employer is shutting down the practice. The problem is that the mortgage payment was almost 50% of their Social Security income. Once the business sells and Jill is no longer working, the mortgage payment poses a significant financial risk to them during retirement.
Thank goodness they were smart enough to see the situation they would be in once they were both retired. They would have had very little income left over to actually enjoy their retirement and do the things they wanted to do.
Not only were they able to get the mortgage paid off with the reverse mortgage, they were also able to get some cash in hand as well as set up a line of credit. They were able to get $20,000 in cash and the line of credit has a little over $74,000 available.
Luke and Jill both felt comfortable living off of their Social Security now that there was no mortgage payment. They also felt more financially prepared now that they had the line of credit as a backup should large unexpected expenses arise.
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