Picture by Bari Goodman
The couple was in their 30s and in debt.  In 2004, they purchased a condo for $200,000 and in 2007, at the height of the real-estate boom, opened a $60,000 home-equity line of credit to buy another property.

When the housing bubble burst a year later, the value of their properties plummeted and they found themselves close to $250,000 in debt. The couple had been working overtime at their respective jobs to keep up with their mortgage and home-equity loan payments. But they both had their hours cut after the economic downturn, and could no longer cover their debts and other expenses. 

In desperation, they reached out to Sev Meneshian, owner of Public Retirement Planners in Evanston, Ill., who has about $1 million under management for 30 families. They told him they might stop making loan payments altogether and stay in their house until the end of the long foreclosure process.

"When they walked in they were like deer in the headlights," Mr. Meneshian recalls.  He could see that the clients were overwhelmed, but he also knew that waiting longer to deal with the debt was the worst thing they could do. He needed to help them take those difficult first steps forward.
"I told them that it was simple: They made a big gamble and lost," Mr. Meneshian says. "Now it was time to focus on what they wanted for their future." 

The clients were grateful to have a guide to help them move ahead, and said they were willing to do whatever it took to rebuild their finances and their lives. The first task: tackling their debt.
Sev Meneshian 

Mr. Meneshian assisted the couple's attorney in negotiating a settlement with their lender by reviewing and organizing the couple's financial statements. They had less than $50,000 in cash and retirement savings, making it clear to both the adviser and the bank that the couple was incapable of repaying their loans.
They settled the $60,000 home-equity line of credit for $6,000 and executed a deed in lieu of foreclosure on their mortgage, handing their home over to the bank. With that, they avoided foreclosure and were released from their debt. 

They turned their attention to the next issue: Finding a new place to live. The couple told Mr. Meneshian that their dream was to own another home, but their damaged credit meant they likely would need to put a minimum of 20% down on any property they wanted to buy in the future. To afford that kind of payment in the next five to seven years, they had to start rebuilding their savings now.

Without a way to increase their income, they needed to save more of what they had. "They had to get very frugal very quickly," says the adviser.  The couple's two largest monthly expenses had been their housing payments and child care for their newborn, which totaled almost $3,500 dollars a month. So Mr. Meneshian suggested a way to reduce both those costs: The couple could rent a house near the husband's parents and sister, who could assist with child care. 

The clients followed his advice and moved into a rental home closer to their family. The move reduced their monthly expenses by $2,000, and they began putting those savings toward a future down payment.
Over the next four years the couple stuck to the budget and their savings plan. They recently became homeowners again--an accomplishment they attribute, in large part, to Mr. Meneshian's help in facing their mistakes and moving past them.
"Financially and emotionally they are back," Mr. Meneshian says. "This couple's story didn't begin well, but because of their willingness to make some serious changes, it thankfully has a much better ending."

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Securities and advisory services offered through Ausdal Financial Partners, Inc.  Member FINRA/SIPC 5187 Utica Ridge Road Davenport, IA 52807    563-326-2064  www.ausdal.com.  Public Retirement Planners, LLC and Ausdal Financial Partners, Inc. are separately owned and perated.