Debt Restructuring, Foreclosure Avoidance and Loan Workouts
Big Debts in Down Markets
It's amazing to see how many Americans there are today who saved, invested and got "rich" in the 1990's and even the earlier parts of the last decade, who are now in over their heads. These are often people who carefully followed savings strategies, diversified their portfolios, planned for retirement - basically, who did everything right.
So where is there money now? Well - when nearly every one of the sound investments of yesterday has gone in the tank today - stocks, mutual funds, real estate, oil and gas, even municipal bonds - have all fallen on hard times. So, it's a hard time to make money,
Worse, however, is the problem of debt. Thanks to the tax reforms of the 1980's, the booming real estate market that followed in the 1990's, and the easy lending practices for loans secured by real estate in the 2000's,mortgage defaults and foreclosure rates zoomed to all time highs in the past few years, and the bubble in housing prices completely burst.
The market disaster has left business executives, successful entrepreneurs, and long term investors upside down on loans they once thought would be paid off by increases in property values alone. The constantly rising market turned out to be a bad joke.
Meanwhile, risk takers who saw opportunity in all kinds of small businesses 10-15 years ago were making low cost investments by guarantying loans for management of closely held companies. For awhile, payoffs were huge. Everyone made money and everyone was happy.
But as the credit crunch set in, everything changed. Suddenly, that floor plan financing deal that seemed so secure, could not longer be paid on time. Once inventories were reclaimed, the lenders only place to turn has been to the guarantors, who themselves no longer have the capital and resources to cover the losses they guarantied.
Times are tough indeed.
What Can a Debtor Do?
For a real estate investor upside down on mortgages and unable to meet debt service, a loan guarantor in default on secured debt, or any other borrower trying to survive in a depressed economy, in the present circumstances the best option is often to create a loan workout scenario you can actually pay.
It seems odd, but when the economy is as bad as it is today, the best leverage a debtor can have can be his inability to pay the full amount of a debt. A creditor cannot collect what a debtor cannot pay any time, but when asset values are declining across the board, the creditor will not be able to collect by liquidating collateral for loans either, and will not have the benefit of pursuing other assets the debtor might hold.
The process boils down to some straightforward arithmetic. But running the numbers, creating a workout plan, and persuading the lender of the reality of the situation is a tedious and detailed process.
You are likely to need sound professional help to get it all done. Thompson & Associates specializes in handling these details to help you settle for a fraction of the total amount due to your creditors. If you need advice or counsel on debt settlement issues, contact the Thompson & Associates team at (877) 365-1776 or via email at firstname.lastname@example.org.
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