Dateline   |  August 30, 2013

On The Edge, Part 2

When their $80,000 safety net runs out, the Sadowskis try tirelessly to refinance their mortgage and find work. Most of their possessions are either repossessed or sold and their marriage starts to suffer.

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This content comes from Closed Captioning that was broadcast along with this program.

>> you deserved the pool and the outdoor barbecue?

>> he worked hard for it. i worked hard. no, i don't think it was excessive.

>> for the sadowskis, signals that the economy was about to change.

>> at that point i started seeing that this was. getting better, it progressively got worse.

>> as business dried up, tim had to start letting workers go.

>> when i have to lay people off that have helped me build my business, i feel like a failure. i mean it hurts me deep down inside. i would be up at 2:00 in the morning until 5:00 in the morning, sleep for an hour down here and go to work when there wasn't any work, looking for work.

>> as the months went by and still no construction projects, tim was willing to take just about any job.

>> i applied for over 100 jobs when things started to slowdown online and to get interviews to get back into construction.

>> they cut back on their spending, but a year later, tim 's business had all but stopped. their savings ran out. krichelle got a job working part-time as a lunch aid supervise at her kids' school. they also turned to family and friends for help.

>> we borrowed a lot of money. which i hate. but we just keep thinking, it's going to get better, it's going to get better.

>> they scrambled to generate money, selling the toys that once gave tim so much pleasure.

>> i have classic cars nobody wants to purchase.

>> the bills were piling up and there wasn't enough money to pay them.

>> we don't owe them anything anymore. we used to have an rv, that was repossessed. i had a merced des that we couldn't pay on anymore and that was repossessed.

>> tim had to do something he never imagined, close his office and shutter his business. and when the company closed, the family could no longer afford health insurance . at this point, tim was desperate.

>> when we started to really struggle, i started using a lot of credit cards .

>> through it all, they had hoped their home would be their safety net . but it could no longer hold the weight of their debt. the sadowskis' house went into foreclosure.

>> this is all the paper work that i generated trying to save our house since 2008 .

>> tim tried desperately to convince the bank to modify his mortgage, making the term of the loan longer.

>> each time i got a letter back that we didn't qualify for a modification. resubmit paper work again.

>> the sadowski's story is the story of millions of americans.

>> jacob hacker has studied the impact of the recession on families like the sadowskis.

>> the numbers are staggering, there's 6.6 million foreclosures between 2007 and the beginning of 2010 .

>> and it wasn't as if they could move in with family. krichelle's mother beverly who lives about 25 miles away, was also trying to save her house . it had been in foreclosure for a year and a half.

>> i saw this tape up there with this paper work and i thought, what's going on? that's when i noticed it was the notice of a trustee fail.

>> we were there when the bank notified her that her house would be auctioned off in a month.

>> i've got days, days. as far as -- what do you mean as far as? as far as stopping this. i want to keep my home. i have been here 27 years.

>> her husband who repaired computers had lost most of his business during the recession, making it impossible to repay their mortgage.

>> isn't it a case of denial that your home --

>> for most americans, your home is their major asset. if your house is repossessed, your credit is ruined, you think you won't be able to get another house . it's not denying, you just hope against hope that you can work it out.

>> each had a house that was under water, meaning they owed morning the house was worth. for the sadowskis, about $90,000 more. by 2009 , the value of their home had plummeted about $300,000.

>> i can't sleep at night. i don't want to lose my house . i don't know where we would go.

>> for noah and owen, no more backyard pool parties and their expensive dirt bikes and four wheelers were sold. and you guys are okay? you have adapted?

>> we don't need a ton of stuff, a few things here and there would make us happy.

>> that's a good attitude, a lot of kids in your situation would maybe be feeling kind of sorry for themselves.

>> i haven't felt like sorry for myself, i feel more sorry for my parents because they don't get as much time to spend together.

>> i thought you were going to feed them.

>> and when their parents were together, they were often bickering.

>> did you use a coupon?

>> no.

>> the finance crisis has already taken so much from this family.

>> we argue a lot because of the finances.

>> and now it was threatening to claim something more important than all of that, tim and krichelle's marriages.

>> i'll get personal with it, my wife told me in august that she wanted a