The Situation
The client, single and a Canadian citizen, owns a one-bedroom condo in Metro Vancouver worth about $675,000 with only a small mortgage left on it. A relationship that drained their finances, now over, had left missed payments and collections on the credit file, a score of 547, and about $25,000 of debt that did not appear on the bureau at all: a loan from a parent and a U.S. hospital bill for emergency treatment while travelling. The client had since found stable work with a law firm at about $49,000.
The Challenge
Active collections and a 547 score close the bank door regardless of equity, and the two largest debts, the family loan and the U.S. hospital bill of about $16,500, were invisible to a credit report and had to be documented and paid through the closing so the lender knew the file was truly clean.
The Solution
In late 2023 we refinanced with an alternative lender: a new mortgage of about $100,000, 15% of the condo's value on a one-year closed term at about 7.8% with a 30-year amortization, qualified on the salary at a 31% debt-service ratio. The proceeds paid out the existing mortgage, every collection on the bureau and the two debts off it, with the hospital invoice and the family loan documented so the solicitor could pay them directly.
The Outcome
One small mortgage payment, no collections, no hospital debt, no family loan, and a credit file that can rebuild toward a bank renewal in a year. Debts a credit report cannot see still have to be paid; a refinance that clears them through the lawyer's trust account is how the slate is actually wiped.