Workouts Are Business Negotiations Not Legal Issues

I have said it before but not loud enough. I talk to so many people who believe the answer to foreclosure process is a legal defense. It is NOT SO. It doesn’t work, it’s a trap and if you go this route you’re falling into it, head first. Here’s the deal, you are guilty and you will lose!

You owe money, you signed notes, signed mortgages, defaulted on the loan and are now being sued with the intent to foreclose and liquidate your collateral and then pursue your personal guaranty, liquidating your personal assets, possibly your home. That’s what is going to happen. Now you know what’s going to happen, so why do it?

It is a trap because it “forces” you to respond, so you believe, to the lawsuit as directed by the legal process and your lawyer and then this becomes the first step in the legal process that you have entered into and will never get out of whole. It’s a battle you cannot win as you have no defense. (If you do, then disregard this article as you should counterclaim and fight your legal battle, go get ‘em. But few have viable legal defenses or offenses). Why allow them to take you down a path where you cannot possibly succeed?

Why does this happen? It’s simple. The bank or SBA or the IRS simply wants to end this issue, liquidate the assets and write off the loss and move on to better deals. They sue to accomplish this goal. You respond by going to see a lawyer, who (surprise, surprise) tells you he must answer the suit or you will default and on it goes. You’re hooked, you swallowed the bait. Then he must continue in the legal process until he has siphoned all your remaining cash out of your wallet and then the bank liquidates your assets. They gotcha right were they want you – in their arena.

A note on lawyers – like going to a bakery where you will always get baked goods, go to a lawyer and you will litigate. Go to a bankruptcy lawyer and you will go bankrupt. What else can you expect? There is a time and place for lawyers, litigation and even bankruptcy, but only when appropriate and it isn’t in a foreclosure setting, in my opinion.

The real answer is to resolve this matter with negotiation, compromise and resolution. A business conclusion – a business workout – not litigation which, in the end, is just another word for liquidation. And of course, there is always bankruptcy, a very expensive form of liquidation. Few ever emerge out of bankruptcy court with any assets other than perhaps their home, but almost always without the business they so desperately wanted to protect and preserve, the moneymaker.

If you open the doors to a negotiated settlement, you have a chance of winning. Depending upon your plan, and skill, you at least have a chance. This is where I operate and I have tremendous success, ignoring the legal game where I will lose and forcing a business discussion which I can win. This applies to the IRS, the SBA, HUD, banks, secured or unsecured creditors. Negotiate, do not litigate.

Call me for help, this is a sophisticated approach requiring skill and experience. Workout negotiations should never be attempted for one’s self. A third party should represent your position, it is far, far more effective.