Home Is Where the Card Is

As their debts rose five years ago, Jeff and Maaike Coldwell unhappily agreed to join more than one million Americans annually who reach the do-or-die point in the Monopoly game of personal finance. The Coldwells filed bankruptcy.

"It was anticlimactic," Maaike Coldwell says, "but it makes you sick to your stomach. You don't want to do it because it puts a black mark against you. There's a stigma attached to it, and you are going to have to overcome it."

Maaike, a hospital secretary, and her truck-driving husband had been on the bumpy road to bankruptcy since moving from San Diego to North Kansas City thirteen years ago. Jeff couldn't find work. They were raising three college-bound daughters. Creditors stalked them silly. The Coldwells, admittedly, barely understood the definition of frugality.

"We made bad choices and there was a snowball effect," Maaike says.

If they were ever going to live the great American dream -- buying a home they could call their own -- bankruptcy afforded them a way to do it. Filing for Chapter 13 debt protection helped them right their financial wrongs. "We could have filed Chapter 7, but we went with 13 because we wanted to pay our creditors," Maaike says. "It was rough, but we did it."

The Coldwells cleared bankruptcy in 1999 and continued dealing with additional financial burdens until the spring of last year. Finally, Jeff and Maaike believed their credit was re-established. They believed it was their time to go house-hunting. What they didn't believe was the rude welcome they got from mortgage companies.

Time after time, lenders looked at the Coldwells' bankruptcy and treated them like Jehovah's Witnesses on a neighborhood recruiting tour. "Nobody would take time with us," Maaike says. "We couldn't get anyone to work with us."

That changed when the Coldwells found David W. Zabawa.

One day while she was working at Children's Mercy Hospital, Maaike Coldwell received an automated phone call from a company claiming to specialize in helping people with credit problems. The prerecorded sales pitch promised to improve customers' credit and help them get mortgage loans. And there was a bonus: Customers didn't have to come up with cash for either the down payment or the closing costs on a home. The recording provided a phone number for HomeBuyers Assistance Foundation Inc., a not-for-profit organization advertising itself as a one-stop credit counseling service, real estate brokerage and finance company.

"It was kismet or karma," Maaike says. "I wrote down the phone number."

When the Coldwells called, they were greeted by another automated recording: If you are tired of being a second-class citizen ... all you have to do is answer a few simple questions.

The Coldwells answered the questions, submitting personal information (a name, address and Social Security number) so HomeBuyers Assistance Foundation could run a credit report to determine whether they qualified for the company's program. Within a matter of days, the couple received a letter saying they were qualified to enroll for nominal charges -- a $100 initiation fee and a $695 program membership fee that would be due within a month; if they didn't pay during that time, the membership price would double.

Fearing this might be their only chance to own a home after their past credit problems, the Coldwells jumped on the offer and paid the $795.

David W. Zabawa, the company's owner, promised to put the Coldwells in the home of their dreams.

Within a year after Maaike listened to HomeBuyers' sales pitch, the Coldwells were able to move out of their apartment. "It was fate," Maaike says, "and here we are."

Last month, the Coldwells closed on a three-bedroom home worth $100,000 in Excelsior Springs, Missouri. As HomeBuyers promised, the couple didn't need to save for a down payment or closing costs. The couple's thirty-year mortgage -- with an 8.5 percent interest rate -- works out to $775.37 a month in payments, well within the Coldwells' budget, Maaike says. They picked up their keys on March 5.

"It's got a fireplace and a fenced yard," Maaike says of her favorite amenities. "If you are not able to get into a home right away and show you can afford it, [HomeBuyers] are amazing. Considering where we were two years ago, this is great."

David W. Zabawa is an ex-convict, but Maaike likens him to a miracle worker. "None of the regular, conventional lenders would look at us. He is the nicest guy."

"People get into credit situations for a lot of reasons -- the economy, divorce, the bankruptcy thing," David W. Zabawa says. "It's also a social disease that says it's okay not to pay your bills. There's a need for what I do, but it's a hard thing to do. Sometimes I don't know why I'm in this business."

Business, however, is booming.

During the past two decades, the country's trend toward credit card debt has been staggering: In 1980, total consumer debt was only $50 billion. Since 1992, the Federal Reserve reports, the country's total consumer debt rose from $731 billion to about $1.5 trillion today. Included is a giant increase in credit card debt: from $292 billion in 1992 to $654 billion at the end of 2000.