Cut Your Losses - Carefully

I spent time in a professional office last week, waiting for someone to do embarrassing things. During the exam I was asked, for about the millionth time in the last 18 months, what to do about over-financed real estate.

The answer to that question sounds so simple you’ll think I’m making this up. I’m not.

See your lawyer, now.

Here’s the setting for the question. The person said, just like many, that he had seen advertisements soliciting the public to resort to some business that specializes in “short sales”, and asking the public to send fees for them to get a purchaser, deal with the mortgage company, and allow the debtor to walk from his mortgage debt. That, they say, is easy. Just send money to the company and sit back and wait.

Here’s the rub. You’re too important to risk your credit rating and your economic future to the same people who got you into this trouble to start with. Those who sold over-priced mortgage packages, for too much principal, with too little down, did not care about you when the mortgages were made. They did that for themselves, not you. They will likewise do your workout for themselves, not you.

See your own lawyer, now.

The same people who advertise that they can work out your IRS debt are saying they can fix your credit card debt, and it’s quick and easy. Again, you are requested to send money to them instead of your credit card finance company. Those people are returning to you for the second or third time to put their hands in your pocket, not their own, and for their benefit, not yours.

I’m ok with someone telling you that they will do something for you with the understanding that if they can perform, you will pay. Sometimes that works. But most want to be paid even if they cannot get the matter worked out in your benefit. That puts you completely at their mercy, without performance criteria, and without any local, demonstrable reputation. The story they tell your mortgage company can get you in a world of trouble if they commit fraud on your behalf. Someone who gets paid a percentage of your short sale for making the deal will disappear by the time you get reported to the IRS for taxable income on debt not paid, or when the mortgage company comes back for collection of the amount of the original debt.

Please don’t understand from these comments that you will get a guarantee from a reputable lawyer, or that you won’t have to pay him or her. But you will know where his office is, and his or her reputation is all they have to sell. You will not be handled like a number, and most lawyers will tell you quickly whether they think they can help, and what it will cost.

Again, I say, do cut your real estate losses and move on. But do it with the advice of your own lawyer, not by chasing an advertisement which was probably placed by many of the same people who yesterday encouraged you to over-finance.

See your own lawyer.