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Credit Card Debt Negotiations

One of my clients came into my office last week. In the past, he would call every year shopping rates for a real estate deal he was putting together. During the recent high flying era, aka, five years ago, he borrowed millions of dollars as he pyramided his holdings. Liquid with THC

Bob was a player, not at all afraid the crash would come and never concerned that his leveraging tactics would some day topple his empire. When he dropped by last week, he was in the process of losing his last property, his tenth foreclosure in the past two years which pretty much signaled the collapse of his thirty two million empire.

Bob had lost weight and over coffee, he revealed to me that he also lost his marriage. He managed a smile, indicating to me that he was moving on, perhaps working in sales or even dabbing at a more simple life.

I heard the words, but his heart just was not in there.

“I might even move into a studio.” he remarked.

I thought back to the Christmas party he threw a few years ago. The lush extravagance, butlers and valet service. He has two beautiful daughters and his wife, now a former, was also a former beauty queen somewhere from the south. Like many of Bobs friends, i was enchanted with her honey rich accent and stunning good looks.

I wondered how his family was doing, but knew somehow not to probe too deeply because Bob’s pain was recent and very raw. As it turned out, he revealed to me that he was on the bad list. The lifestyle he once provided was torn form his family as he stood by helplessly. He almost cried as he told me the story.

I always made good sense, he told me. Though I was conservative, I liked to throw the dice now and then, but always cautioned Bob not to siphon all the equity out of his properties. I lived through recessions in the early 80’s and then again in 92 when Iraq was at the forefront of everyones interest.

During both of those times, business stopped churning and money dried up. Searching the streets for tenants was a useless exercise because the few available were holding on for dear life.

When rents stop coming in, it gets more and more difficult to debt service existing debt, but without equity the payments are normally too high to continue.

Bob knows this not only because I told him repeatedly, but now because he just experienced it.

“My credit is so bad, I couldn’t buy a pothole.” He mumbled. “I am using credit cards to live.”