When You Owe the Bank…What’s Your Legal Defense?

This was somewhat of a rhetorical question.  The answer (in most cases) is that you have no defense.  Did you REALLY REALLY take the loan out?  Did the bank REALLY REALLY disburse the cash to you?  Did you REALLY REALLY sign the note?  Of course, all of the above.  Maybe it was someone else’s signature?  Maybe you were on drugs when you went to the bank and you were duped into signing.  I’ve heard some very silly reasons over the years of why a borrower does not have to pay back the bank, almost never are they legitimate or would they hold up in a court of law.

So why not try the opposite?  I do this with almost all my clients.  Recently I had a client whose printing company went out of business.  He was on the hook for millions of dollars in personally guaranteed business debt.  His most aggressive creditor was his landlord who sued him right away for breach of contract.  He was looking to collect the full $180,000 that he was owed and got his lawyer to begin the process.  Even though I’m not a lawyer, I called him right away to try and negotiate a settlement.  The lawyer was adamant  about moving forward with a judgement and pursuing my client “to the furthest extent of the law.”  Rather than recommending legal defense measures to my client, I told the lawyer to send us the proposed judgement and that we would consent to it.  Why waste good dollars in legal defense when we know the results?  The landlord would definitely be awarded the judgement he desired and we would never be able to come up with any defense to prevent that.  I showed the lawyer our desire to cooperate, I communicated my clients difficult financial situation and most importantly we acknowledged the debt owed and did not try and avoid it.  We quickly settled for $25,000, my client was very pleased with the result as was I.

Too many times people ask me how to “get out of a debt.”  I tell them the same thing…you can’t.  Your best approach is to face the debt head on and settle it.  Some of the best lawyers in the country will not get you out of a debt you legitimately owe.