Q: I’ve gotten pretty far behind with my strata payments. I get past due notices with fees added on almost every month because I usually can’t pay enough, let alone all of what I owe. COVID is making it harder to catch up because whenever I get behind my mom usually helps me out, but she’s off work right now. I’m on EI and waiting to get disability benefits reassessed, but I’m embarrassed to tell the strata manager this. When they ask me to catch up, I just say that I’ll make bigger payments, but can never follow through. Now I’ve got a letter from a lawyer that they will force me to move if I don’t pay. I emailed the lawyer a payment plan and hope council will accept it, but I have no idea if I’ll be able to stick to it. I don’t want to lose my condo; what can I do? ~Marlena
A: Strata corporations count on each owner paying their share every month in order to meet the corporation’s financial obligations, so when owners get behind it impacts everyone. A strata corporation wouldn’t be doing its job if it didn’t actively try to collect what is owed from owners who either repeatedly fall behind or fall behind for large sums. However, it can become a difficult situation for everyone because owners are all neighbours, and possibly friends as well.
When it comes to our household budget, there are certain expenses which must come before others — ensuring that we meet our housing obligations is one such expense. Money for groceries and medical needs round out the list of the top three most important expenses. As you look at your income and expenses, here are some things to keep in mind that may help you deal with your circumstances more effectively.
Craft an emergency budget
A financial emergency calls for a realistic budget . Look at your obligations, bills and expenses to see where you can reduce your costs . Some costs you might be able to reduce temporarily; others need to be eliminated. Any amount of savings will help towards balancing your budget.
Next, consider how you can get help to cover a budget shortfall. When on EI and/or disability, there are typically restrictions on how much additional income you can earn, so look for ways to balance your cash flow without jeopardizing your sources of support. For instance, could you take in a roommate to make up your budget shortfall? Or maybe you’ve got adult children living at home who could take over paying certain bills and/or buying groceries.
To turn your circumstances around, as hard as it may be, you need to arrive at a point where you’re not spending more than what’s coming in.
Take a look at all of your debts
As you craft your emergency budget, you’ll naturally come to a point where you’re listing out whom you owe money to and how much. This is an important list and getting it down in black and white will help you prioritize which debts need to be paid first — and if you can afford to pay them or not.
If your strata corporation has already contacted a lawyer about your arrears, you will need to prioritize this debt if you want to keep living in your home. Coming up with a mutually agreeable payment arrangement will be difficult given that you have not followed through with past arrangements. However, there are things you can do to increase the likelihood that it will be possible.
When not to make revised payment arrangements
Making payment plans that you can’t follow through with is detrimental to your situation. That is why it is important to craft a realistic budget before you offer a way to clear up what you owe. If you need help creating a budget, contact a non-profit credit counselling organization in your area ; they will be able to help at no cost to you. This may also be the time when taking a hard look at your situation will lead to some very difficult decisions.
Your strata is like any other creditor and expects that when you’re unable to make your normal payments and agree to alternate arrangements, you stay true to your word. Just like with other creditors, communicating when you’re unable to pay is essential. If your strata council only hears silence from you, they will be left with no choice but to proceed with legal action.
If you’ve reneged on previous payment plans
If you have reneged on previous payment arrangements, you can likely expect an uphill battle with any plan you put forth this time. There are, however, steps you can take that will strengthen your position. Start by explaining if you’ve been able to free up cash in your budget that previously wasn’t available. This could be outlining which bills you’ve reduced and what that total comes to on a monthly basis. If you’ve taken in a roommate, that is extra cash for strata arrears. Share as much as you’re comfortable sharing and provide proof wherever possible.
If you’re not behind with your mortgage payments, you might be able to ask your lender for a hardship deferral. This would allow you to redirect mortgage payment money to catch up on your strata fees. Or you may have possessions that you could sell to generate a lump sum of money. This could go against what you owe the strata so that monthly payments will resolve your debt within as short a time as possible.
The goal behind providing proof is to bolster your assertion that a payment arrangement this time will be different than in the past. Your goal is to show that you have the ability to follow through with what you’ve proposed. It’s likely a one-shot deal so be sure that you can afford whatever you agree to.
Can you file bankruptcy and keep your house?
Whether or not you will lose your home if you file for bankruptcy depends on the specifics of your situation and in which province you live. As strange as it sounds, bankruptcy does not automatically force your home into foreclosure. A lot has to do with how much net equity you have in your home.
If you can afford your mortgage payments and your net equity is below the provincial exemption, there’s a good chance you’ll be able to keep your home if you declare bankruptcy . However, there are many ways to deal with debt, and options to consider that are alternatives to bankruptcy . Don’t automatically assume that just because you can’t afford to pay your bills and debts that you need to file for bankruptcy.
Mortgage renewal may be impacted by strata arrears
Once your strata corporation begins to pursue legal action to recover the arrears you owe for unpaid strata payments or special levies, you will face some difficult decisions. Your mortgage holder may even have given the strata notice that they want to be notified if you are in arrears with your strata obligations. This could potentially provide you with some assistance, but it will also make renewing your mortgage that much harder.
The bottom line when you’re behind with strata payments
If outlining your budget and determining how best to tackle your debts reveals that you can’t afford to keep living in your home, take action sooner than later and stay in control of decisions around your living situation. Find a place to rent, see about buying something more affordable, sell your home yourself, or even consider renting it out if it will generate enough income to pay for itself. Even if you need to make choices you don’t like, having a plan that you control will give you some peace of mind during this tumultuous time.
Scott Hannah is president of the Credit Counselling Society, a non-profit organization. For more information about managing your money or debt, contact Scott by email , check nomoredebts.org or call 1-888-527-8999.
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