[El_Superbeasto]

(05-17-2014 12:19 AM)cooledcannon Wrote:  

...Plus if I started a business I dont have to take loans; I can just get venture capital or raise money myself, or even find a way to get started without capital.

Why so dead set against debt financing? I'd argue that the equity you'd give up in any VC deal is much more valuable than what you'd be paying to borrow the money.

Plus you have to deal with their megalomania, and run the risk of serious headaches is if your interests aren't aligned with his. For example, a VC might be after a quick exit via acquisition while you might feel very strongly that you can grow the business and do much better down the road.

Also, raising venture capital is lot easier said than done, especially if you don't have a robust network or live in an area with lots of VCs (they hate to travel).

[Samseau]

(05-17-2014 06:58 PM)cooledcannon Wrote:  

(05-17-2014 10:14 AM)Samseau Wrote:  

(05-16-2014 08:18 PM)cooledcannon Wrote:  

(05-16-2014 11:45 AM)Samseau Wrote:  

Well the alternative you stated - debtor's prison - doesn't seem quite logical at all. How is sending people to jail going to get them to make enough money to pay off the debts?

I suppose it means they are going to pay them off because they wont want to go to jail.

And if they don't have any money?

Well if you are going to risk going to jail, then you are going to get the money one way or another.

Or alternatively, you could just not borrow in the first place.

So by throwing debtors in jail you increase crime from desperate men with nothing left as well as discourage people from taking on business risks?

[cooledcannon]

(05-17-2014 08:09 PM)El_Superbeasto Wrote:  

(05-17-2014 12:19 AM)cooledcannon Wrote:  

...Plus if I started a business I dont have to take loans; I can just get venture capital or raise money myself, or even find a way to get started without capital.

Why so dead set against debt financing? I'd argue that the equity you'd give up in any VC deal is much more valuable than what you'd be paying to borrow the money.

Plus you have to deal with their megalomania, and run the risk of serious headaches is if your interests aren't aligned with his. For example, a VC might be after a quick exit via acquisition while you might feel very strongly that you can grow the business and do much better down the road.

Also, raising venture capital is lot easier said than done, especially if you don't have a robust network or live in an area with lots of VCs (they hate to travel).

Im not really against borrowing. But I do think giving up equity is not a bad deal at all. At the start, equity is worth next to nothing(while money itself is worth quite alot), and after youve grown your business, you dont mind because your business has grown far more than it could without the investment.

A smaller piece of a bigger pie, in other words, which ends up being a bigger piece, probably.

I think borrowing is particularly risky as itll completely ruin you if you dont manage to find some way to pay it off. You should still have it as an option but you need to be able to make lots of money(more so than any other option)

Im sure especially with the internet there are many ways to startup a business without needing alot of capital though.

Im interested to know what your experiences are with VC(if you have them). I havent got any, ill admit, so I am curious. I also think if you are going to risk thousands of dollars into a business you should spend a few hours learning how to network and develop relationships with people who can help you out.

[cooledcannon]

(05-17-2014 08:58 PM)Samseau Wrote:  

(05-17-2014 06:58 PM)cooledcannon Wrote:  

(05-17-2014 10:14 AM)Samseau Wrote:  

(05-16-2014 08:18 PM)cooledcannon Wrote:  

(05-16-2014 11:45 AM)Samseau Wrote:  

Well the alternative you stated - debtor's prison - doesn't seem quite logical at all. How is sending people to jail going to get them to make enough money to pay off the debts?

I suppose it means they are going to pay them off because they wont want to go to jail.

And if they don't have any money?

Well if you are going to risk going to jail, then you are going to get the money one way or another.

Or alternatively, you could just not borrow in the first place.

So by throwing debtors in jail you increase crime from desperate men with nothing left as well as discourage people from taking on business risks?

Well, personally, I would only take on business risks if a VC or other forms of investment took care of the capital(Or of course, I have enough capital myself). Then, all the risk is on them. They are sort of like insurance.

(If not, then I will generally accept that my idea may not be good enough; and I will try something else if I cared that much about this)

I would say being irresponsible and taking out loans without being relatively certain of how you will pay it back is immoral, maybe could be a "crime" by itself. Besides the less people than default the lower the interest rates will be.

Though I suppose it depends on whether you think the debtor or the creditor should take the hit. I think the debtor whos at fault should; then debtors who arent at fault dont get hurt at all.

[Quintus Curtius]

(05-16-2014 10:16 PM)renotime Wrote:  

(05-16-2014 11:05 AM)el mechanico Wrote:  

Quote:

Also - for those declaring bankruptcy - do they have to give up their expensive houses - or do they get to keep them?

Haha keep them. Bankruptcy is a very powerful tool and a great way to play "chicken" with the banks. Some people have no choice as they are unreasonable and a bankruptcy judge will force them to come to the table that's why so many people use it.

Not only do they keep them if underwater they can reduce your principle and it's almost automatic on vacation houses or second homes, second mortgages and other unsecured debts get wiped off pretty much.

This is a very complicated subject.

I own a non performing second mortgage on a guy that filed chapter 7 bankruptcy a few years back. He still lives in his house and is still paying his first mortgage.

I'm not really sure what BK court absolved him from paying.

When I started calling the guy he was convinced he didn't owe anything on the second because he had filed bankruptcy. He thought the lien had been wiped.

Since there is no equity in the second mortgage he could potentially go back to BK court and have the lien wiped.

As far as second mortgages go, as long as there is equity in the lien, the mortgage can't be wiped.

So right now I'm gonna let this borrower pay down his first, let some equity accrue, and then call him up again to work something out.

He'll probably try to run back to BK court, but he won't be able to do shit.

Yes, you're right. "Lien stripping" of an unsecured mortgage is not available for debtors in a Chapter 7 case, even if the mortgage is totally unsecured. However, it can be done in a Chapter 13 or Chapter 11 case.

If your debtor filed a Chapter 7, your second mortgage will remain. As he pays down the first mortgage and slowly builds up equity in the property, your second mortgage will (hopefully) eventually become secured by some equity. He's going to have to pay it off eventually if he wants to keep the house. Just hope he doesn't surrender the property. If that happens, the debt will be wiped out (unless you got him to sign a reaffirmation agreement).

Did you try to get him to sign a reaffirmation agreement? It's worth a try, but no attorney worth anything would advise him to do it.

Q