One quick way to come up with cash when you need cash is
to sell your assets. Liquidate anything that you can
sell and do without. You might have more options than
you realize or more assets than you previously let
yourself realize that you had. Take my situation for
instance. I am facing foreclosure on three real estate
properties (see
my properties). I am also facing liens from the
homeowner's association, and the condo association has
already taken me to small claims court (read
about the judgment). With a judgment in their favor,
the condo association will take action to secure their
funds from me. That may mean placing a lien against the
condos or seizing my bank accounts or garnishing my
wages. The house and the two condos will go back to the
banks in foreclosure. The banks will then sell the
properties, but they will then come after my earnings
and my assets for the deficiencies. Of course, they
could write-off the debt simply as bad debt and not
pursue me. They would, however, be required by law to
report that forgiven debt to the IRS who would then
consider the forgiven debt as income (yes, even though I
never saw a dime). The IRS would then come after my
earnings and assets. It is an unrelenting cycle.
Bankruptcy is not an easy
solution, but I could file for bankruptcy and get out
from under all of this debt. Of course, the bankruptcy
court will still make me liquidate all of the assets
that I can liquidate in an effort to pay my debts. While
bankruptcy is still not a route that I plan to take or
have ruled out, I have decided to take actions to
liquidate my own assets according to my own terms. Let
me discuss with you my reasoning.
I have outstanding
student loans on which all of my payments are current.
Bankruptcy will not erase student loan debt so I would
have to continue to pay for my student loans whether I
file for bankruptcy or not. Even though my monthly
payments are only about one hundred fifty dollars ($150)
a month, the balance is around ten thousand dollars
($10,000). Paying off student loans would be one of my
priorities.
Facing the possibility of
my creditors garnishing my wages (they can garnish up to
25% of my net wages), I could be facing considerably
less income in the next few years or longer. Therefore,
I need to look at my current living expenses and find
ways to reduce these expenses. My largest expenses are
my rent payments and my car payments and the car
insurance payments. These are not considered assets as I
am renting my apartment (I do not own it), and I am
leasing my car (Again, I do not own it). The insurance
payments are a liability that I need to pay as long as I
have the car. I have been paying these monthly, but I
should look at paying these on a yearly basis. The car
is leased for four years so I plan on seeing about
paying four years in advance if they will let me.
How am I going to pay for
all of this? That is a very good question. I have a lot
of money in stocks and stock options that might be
enough to cover these payments so I intend to sell these
stocks and stock options and use that money to pay these
expenses.
Why would I not take that
money and apply it towards my debt for the houses?
Again, that is a very good question. The money I have
would not be enough to save those houses. The banks will
be taking back those houses shortly so I would not have
anything left after they take them back, just less money
and fewer assets and more debt - not a very good
proposition. No, I need to look at taking the money that
I have and applying it to my current bills and expenses
in a very efficient manner.
After all of this is said
and done and the banks and the courts are involved, the
courts and the banks will make me distribute my assets
according to their terms. That is expected. I need to
take this time to proactively do that for them in my
best interest. After all, their debt is secured against
the real estate and they will have that back. I will
have very little left after that is done.
What do you think? Is
this a good course of action? Should I do something
else? What do you think I should do? Email me or post
your comments. I will be speaking with my lawyer this
week. I will update this post to let you know how that
meeting goes. You can subscribe on the comments page to
be emailed when I update the entry (you can unsubscribe
at anytime as well).
If you are in a similar
situation, I strongly encourage you to consider all of
your options. What are your assets that you might sell
for cash? What will the banks/courts (as they are pretty
much the same thing to me) do with those assets? What
will you be left with after the banks/courts sell and
distribute your assets? What might you do differently if
you could do them before the banks/courts get involved?
Most importantly, do things legally. I will be talking
with my lawyer tomorrow. You should do the same (I am
not a lawyer).
Related Entries
Small
Claims Court
Being Served Foreclosure Papers
Before You File Bankruptcy and Before You Miss a
Mortgage Payment
From Mortgage Payments to Rent Checks
Federal Income Taxes on Forgiven Debt
Noah's Foreclosures
Take my Survey: What do you think I should do with my assets?
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