Pro Asset Protection

Attorney Ike Devji

  • Articles
  • Contact
  • Facts and FAQ’s
  • Asset Protection Attorney Ike Devji – Bio
  • Home
  • Off the Record
  • Reputation and Recognition

Real Estate Liabilities and Physicians’ Financial Solvency

January 26, 2012 by Ike Devji, Asset Protection Lawyer 1 Comment

As an asset protection attorney, my primary responsibility has always been helping clients identify and proactively plan against as many litigation-related exposures as possible. That planning now includes a more complete evaluation of financial and economic risks than ever before. Below is one common example that illustrates the challenges many are facing and the importance of proactively addressing and eliminating these threats.

We are seeing more and more physicians’ financial solvency threatened by the level of personal real estate related debt they are holding. Many are overleveraged into their homes and have payments that are now difficult or impossible to sustain due to combinations of financing challenges and income reductions. Many of those in this predicament purchased homes four to six years ago on interest-only loans that now cannot be easily refinanced due to unprecedented declines in the values of their homes.

 

We discussed the issue of strategic mortgage default in a previous blog post, but for those who do not qualify or who would face substantial personal liability on the loan under their state’s law, the key is to act fast and minimize your exposure by getting out of the house on a short sale or by buying down the loan enough to get the financing required. Due to the great deal of time involved in the average short sale and the issues involved in refinancing, it’s important to be aware of your cash flow and solvency requirements and be a minimum of 120 days ahead of your “crisis” moment, ideally much longer. Remember, just because you decide you are ready to try a short sale does not mean your lender will agree.

One physician client recently walked through her options with me. She wanted to refinance a short-term, interest-only mortgage but needed to make an additional capital contribution of about $100,000 to get the financing she needed. This was unthinkable to the client based on the decrease in value the home had undergone, but turned out to be a good option; here’s why.

She had personal liability exposure under their state’s law of $800,000 if she defaulted. As the family had no current protective planning in place and a clear liability under their state’s law, they would have been both homeless and looking at a solid $800,000 liability plus the costs of legal fees and interest (and the loss of the large down payment and the improvements they had made to the home over the last four years) if they defaulted. Bankruptcy would have cost them nearly an equal amount due to the value of the non-exempt assets they held.

By buying the mortgage down and obtaining manageable financing she and her husband were able to keep the house the family loved, pay the mortgage, and even get a rate several points below what they were currently paying. They were also able to transfer exposed assets (cash) into protected status by moving or converting it into home equity protected by her state’s homestead limits, important given their delicate financial position and a hedge against a future bankruptcy if ever required. Ideal? No, but certainly the lesser of a number of evils for this family.

The same kind of risk-reward analysis easily applies to commercial real estate exposure. Another physician was in a position where the $500,000 loan on their medical building was no longer sustainable. His income had dropped from nearly $500,000 in a peak year to about $150,000. After examining the personal guarantees and potential exposures, selling at $50,000 below what he owed became the clear best option. It reduced his exposure on a personal guarantee by 90+ percent, freed up cash desperately needed in the practice and at home, created a manageable $50,000 short fall he was able to negotiate payments on, and freed him to rent a more affordable space and stay in business.

Again, early treatment and diagnosis are the most vital keys to surviving and minimizing your loss and exposures. Part of the crisis faced by many we have talked to is that they simply waited too long to act. They were used to being successful and having high incomes and had not adequately adjusted their spending and budgets to a sustainable level in time, burning through cash reserves and even savings and protected retirement assets before they acted and when the timing left them the fewest options.

As always, the information presented here is general and educational and can never replace the advice of experienced counsel specific to your assets or situation. This article originally appeared at www.PhysiciansPractice.Com where Ike Devji is a regular contributor, and is reprinted here with permission.

Share this:

  • Click to share on Facebook (Opens in new window)
  • Click to share on Twitter (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to share on Pinterest (Opens in new window)
  • Click to share on Reddit (Opens in new window)
  • Click to share on Tumblr (Opens in new window)

Filed Under: arizona forclosure, arizona real esate, Asset Protection, Bankruptcy, chiropractors, dentists, Doctors, FINANCIAL ISSUES FOR DOCTORS, physicians, real estate investing, recession survival, Strategic Default Tagged With: arizona, Asset Protection, Dentists, Doctors, finance, Ike Devji, luxury homes, MD, paradise valley, phoenix, physicians, Residential Real Estate, scottsdale, strategic default

Comments

  1. Jeromy Pfundt says

    February 15, 2012 at 9:04 pm

    Appreciating the persistence you put into your site and detailed information you offer. It’s good to come across a blog every once in a while that isn’t the same old rehashed information. Wonderful read! I’ve saved your site and I’m adding your RSS feeds to my Google account.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

See Ike’s Work In Action

· Ike Devji on Acrimoney.com
· Ike Devji on CFO ADVISORS
· Ike Devji on Infosec Island
· Ike Devji on Risk and Threat Management

Money Matters Interview

Recent Posts

  • The Business Roundtable Podcast: Asset Protection
  • The Risks of Doing Business With Family Members
  • Campaign Contributions: What Business Owners Need to Know
  • Recession Asset Protection – Is My Bank Safe?
  • Asset Protection for Pain Management Doctors and Anesthesiologists

Categories

  • 2012 Economy (3)
  • 2013 Economy (3)
  • 2020 Recession (1)
  • 529 and College Savings Plans (1)
  • abusive tax schemes (13)
  • APT (3)
  • Arizona (19)
  • arizona anti-deficiency statutes (5)
  • Arizona Asset Protection (33)
  • arizona bankruptcy (4)
  • arizona economy (13)
  • Arizona Estate Planning (11)
  • arizona forclosure (8)
  • arizona real esate (12)
  • Asset Protection (174)
  • Asset Protection Education (16)
  • Asset Protection for Doctors (36)
  • Asset Protection for Your Home (7)
  • Asset Protection Fraud and Failures (22)
  • asset protection law (25)
  • asset protection strategies (42)
  • asset protection trusts (33)
  • Baby Boomers (5)
  • Banking and Bank Solvency (5)
  • Bankruptcy (8)
  • Best Money Market rates (1)
  • brokers (1)
  • Business Asset Protection (3)
  • business law (3)
  • business legal planning (72)
  • business owner and entrepreneur (15)
  • Business Owners (28)
  • business survival (48)
  • business valuation (6)
  • buy sell agreement (5)
  • captive insurance company (8)
  • Cars and Automobile Liability (4)
  • Cash Alernatives (2)
  • CEO (27)
  • children (8)
  • chiropractors (35)
  • CIO (1)
  • closely held business (30)
  • commercial real estate (8)
  • Coronavirus (2)
  • cpa (20)
  • creditor negotiation (4)
  • creditor protected cash alternatives (5)
  • Crisis Management Planning (7)
  • CTO (1)
  • DAPT (3)
  • debt (4)
  • deficiency judgment (2)
  • defined benefit plans (2)
  • dentists (57)
  • Director and Officer Liability (10)
  • disability insurance (2)
  • Divorce (5)
  • doctor sued (44)
  • Doctors (54)
  • Domestic Asset Protection Trusts (2)
  • Due Dilligence (11)
  • economy (9)
  • employee social media usage (3)
  • Employment law (25)
  • Entrepreneurs (5)
  • equity (1)
  • ESTATE MANAGEMENT (2)
  • estate planning (29)
  • estate tax (12)
  • estate taxes (3)
  • Expatriation (1)
  • face book (3)
  • family business (19)
  • Family Legal Planning (7)
  • family liability (11)
  • family limited partnership (4)
  • Family Office (8)
  • FAMILY OFFICE ISSUES (6)
  • FDIC Insurance Limits (2)
  • finacial advisors (7)
  • Finance (12)
  • financial advisors (23)
  • FINANCIAL ISSUES FOR DOCTORS (47)
  • financial literacy (56)
  • financing (6)
  • firearms (5)
  • forclosure (2)
  • foreclosure (3)
  • foreign bank accounts (7)
  • fraud (18)
  • fraudulent conveyance (3)
  • funding (3)
  • Geri Custer (1)
  • gifting (1)
  • Gifting – Wealth Transfer (4)
  • Greg George (5)
  • GTI ADVISORS (5)
  • Gun trusts (1)
  • guns (7)
  • HEALTH CARE LAW (6)
  • high net worth (17)
  • HIPPA violations (1)
  • homeowner's liability (13)
  • HR (3)
  • IAPT (2)
  • id theft (4)
  • Ike Devji (100)
  • Ike Devji – Asset Protection Expert (5)
  • ILIT (2)
  • information security (5)
  • intangible assets (3)
  • intellectual property (1)
  • investing (12)
  • investment exposure (14)
  • IRA creditor protection (1)
  • IRA Trusts (1)
  • Irrevocable Life Insurance Trust (3)
  • IRS (7)
  • Jeff Christenson (4)
  • Jumbo CD Rates (1)
  • kids (6)
  • lawsuit awards (23)
  • lawyers (8)
  • Leadership & Management (12)
  • leading wealth and legal advisors (2)
  • legal documents and records (3)
  • Legal Strategies (19)
  • liability (46)
  • liability insurance (35)
  • Life Insurance (13)
  • life Insurance conversions (1)
  • LIFE INSURANCE CREDITOR PROTECTION (2)
  • Life Insurnace Conversions (2)
  • Limited Liability Companies (2)
  • Limited Partnerships and FLPs (1)
  • linkedIn (1)
  • LLC Asset Protection (3)
  • LLC Myths (2)
  • Loan default (4)
  • Lotzer Law Group (1)
  • malpractice (14)
  • malpractice insurance (2)
  • marketing and reputataion management (2)
  • Marriage and Family (2)
  • Medical Marijuana (1)
  • Medical Practice Management (23)
  • medical practice mangement (31)
  • Medical Practice Risk Management (14)
  • mexican real estate (1)
  • Mortgage (1)
  • Municipal Bonds (2)
  • Nevada (1)
  • offshore (16)
  • offshore banking (9)
  • offshore trusts (13)
  • parenting (7)
  • partnerships (2)
  • personal finance (2)
  • personal injury (8)
  • personal security (9)
  • physicians (41)
  • physicians personal finance (3)
  • privacy and identity (2)
  • professional athletes (27)
  • professional entertainers (17)
  • property insurance (7)
  • rachel weiss (5)
  • Raisng Capital and Funding Your Business (1)
  • real estate investing (14)
  • recession (12)
  • recession lawsuits (13)
  • recession survival (32)
  • Reputation and Recognition (1)
  • reputation management (1)
  • Retirement Plan Creditor Protection (2)
  • retirement plan funding (2)
  • Richard Arnold (1)
  • risk management (11)
  • scams (13)
  • Scottsdale (1)
  • Sean Shepherd (3)
  • SEC (1)
  • secret bank accounts (6)
  • SECURITY (5)
  • shelf corporations (1)
  • small business (3)
  • social media (5)
  • start-ups (7)
  • startup (5)
  • Strategic Default (4)
  • Succession and Transition Planning (5)
  • Surgeons and Surgical Centers (5)
  • tax deductions (19)
  • tax fraud (7)
  • taxation (17)
  • taxes (23)
  • THE VAULT (2)
  • Trisha Lotzer (1)
  • trusts (4)
  • twitter (1)
  • Uncategorized (52)
  • up front fees (1)
  • Urgent Care Centers (1)
  • vacant real estate liability (4)
  • venture capital (6)
  • wealth transfer (5)
  • Wealth Transfer Strategies (13)
  • women & money (8)
  • Workplace Violence (2)
  • worth magazine (4)

Copyright © 2021 · Dynamik-Gen on Genesis Framework · WordPress · Log in