Should I let the bank do a voluntary repossession of my car or boat?
Donald: My question is I own a boat I own $120,000 on.
Attorney Tom Olsen: All right.
Donald: I bought it about 10 years ago, and its cost me almost $3,000 a month to keep the thing afloat, had it up for sale for four years; can't get rid of it. I'm thinking about doing a voluntary term. I have most of my properties in a trust, and when I purchased it I did not have the trust. What can I do and how can I maneuver my way through something like this?
Attorney Tom Olsen: Well, first of all Donald, a typical living trust that people are using to avoid probate has nothing to do with protecting your assets from creditor claims. With a typical living trust, any creditor that can get your money without a living trust, can get your money with a living trust. Now, Donald, are you married or single?
Donald: I'm a single man.
Attorney Tom Olsen: Okay, Donald, if you did a quick sale on the boat, how much would you sell it for?
Donald: I'd be lucky to get 60 to $80,000 worth. It's just there's just no market for 50-foot Hatteras.
Attorney Tom Olsen: Oh, boy, Donald, do you have 60,000 bucks sitting in the bank somewhere?
Donald: No. I don't. When I bought it 10 years ago, I had all those things.
Attorney Tom Olsen: Donald, here's what I'm saying, and this is no different than a bank doing a voluntary repo, or a repo on a car. If the bank repos your car, or your boat, they're going to go out and do a quick sale, I mean, talking fire sale prices on it. If you could get 60,000 at a quick sale, they'll get 40,000. The difference is, if you sell it for 60, you can bring 60 to closing and you're even. If they repo and sell it for 40, they're going to look to you for 80.
Donald: All right.
Attorney Tom Olsen: It's always best, even if you got to pull money out of your pocket, is always best to sell it for a loss, and bring money to the closing and pay your loan off Donald. Donald, with that money, I'm not even sure if you might even be in a candidate for bankruptcy Donald.
Donald: I don't think I am. I own four different properties out right on my own office, and accessories going that way. That's just the way it is and I have a home that does -- I've got a lot of equity in.
Attorney Tom Olsen: Well, Donald, the good news is that your home is absolutely protected from this lien against the bank, okay? Your rental properties, your office building, are not. Donald, I'm still telling you that as much as it hurts you, you would still be better off selling it yourself and bringing money to the closing, than letting the bank sell it for you, and then really taking even a bigger loss on it.
Donald: How long will it take them to take a bite out of me for what I own?
Attorney Tom Olsen: I would say probably within four to six months they'll have that sold at a super fire sale and be pursuing you for the balance, Donald, okay?
Donald: Okay, do they have a court order to go after my properties or what?
Attorney Tom Olsen: Yes, they'll be suing you, and they'll do a judgment to collect monies from you Donald. I suspect it's going to come Donald. We're going to take a break now. I wish you best of luck. Hey, Donald, I wish I could afford your 50-foot Hatteras. That'd be pretty cool.