Anyone here having to consider bankruptcy?

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Apr 11, 2009 10:32 pm

My biz down about 40%. Running out of money and options. Yeah I know I f'd up, but what can you do. I definitely have learned a major life lesson with this. Phone rings off the hook all day long with bill collectors. Home, work and cell. Driving me frigging nuts. How do you handle a bk and your firm? Who do you tell and when? If I could wait till the forefront bonus in Sept, if they even pay it, I'd be ok, but I dont think I can hang on that long without crap like garnishment and  levy's starting.  Other FA's I know, many facing the same problem. None know how to deal with this. We could take deals, but I have been down that road before and Im not willing to imperil myself any further with a deal that may not work out.

Apr 11, 2009 10:37 pm

I dont know much about this stuff. But it seems to me if you could get a decent deal, that would help you pay off your debt, you should take it and then work your arse off to get your book going again.
Better hurry though, the deals are going to disappear real quick, like don't blink.
Good luck, tough situation, i feel for you

Apr 11, 2009 10:48 pm

Thanks Bob....I am speaking with other firms. Just very reluctant to go just for money. I did that once and it was a disaster. I dont want to go BK, but I really have no options. I cant borrow from family. Dont really have any. The interest on the damn debt will just eat you alive. Its just criminal. Obama people ought to be looking at the 30% credit card interest rates. Very tough to ever get rid of that debt. I dont live extravagantly. Its just stuff that built up over time. Just debt trying to take care of a family. Been handling it up until end of 08 started having trouble and income just getting crushed. I cant meet my obligations for the first time in my life. 

Apr 12, 2009 7:48 am

Don't you have 30% credit card interest because you have proven yourself uncredit worthy?  Instead of going to another firm, shouldn't you be looking for a different career?


If you quit making payments on your debt because you truly can't afford to pay, eventually you'll be able to settle for 40% or less on the dollar.

Apr 12, 2009 8:11 am

I would suggest that you visit Dave Ramsey's website.



www.daveramsey.com



His logic on running the cash flow side of your life is great. Even though I am not in this situation, I watch his show and like his logic.Check it out. If you and your wife adopt his philosophy, it might help you.



While it is possible to have a bankruptcy on your record and work as a financial advisor, most firms have extra compliance requirements and do not like to hire this profile. Therefore,if moving firms is part of your strategy you want to do it sooner rather then later.



Personally, If I were you I would go to the above website and make a list of the things that you can do. Then if you nalready have not deone it you need to sit down and have a good honest conversatioon with your wife.



Good luck.

Apr 12, 2009 9:15 am

Showmethemoney, my last post probably came off as jerkish.  It's not meant that way.   They're meant as serious questions.  Also, the simple fact that you are getting these calls may be something that your firm requires you to report to them. 


Best of luck to you!

Apr 12, 2009 10:30 am
showmethemoney:

My biz down about 40%. Running out of money and options. Yeah I know I f'd up, but what can you do. I definitely have learned a major life lesson with this. Phone rings off the hook all day long with bill collectors. Home, work and cell. Driving me frigging nuts. How do you handle a bk and your firm? Who do you tell and when? If I could wait till the forefront bonus in Sept, if they even pay it, I'd be ok, but I dont think I can hang on that long without crap like garnishment and  levy's starting.  Other FA's I know, many facing the same problem. None know how to deal with this. We could take deals, but I have been down that road before and Im not willing to imperil myself any further with a deal that may not work out.




Sounds like you're trying to sell people something that they don't want to buy. Figure out what they want to buy and sell it to them.

Apr 12, 2009 10:37 am

as far as the taking a deal option, not only are deals going away for most producers , a bad credit situation could also prohibit you from getting a good deal. Since most of them are structured as forgivable loans, a lot of companies will check your credit. a friend of mine had his deal cut dramatically after a credit check.


I feel for you, man. it's tough out there and there's a not exactly a large pool of sympathy out there from the general public for guys in our situaion.
Apr 12, 2009 11:33 am

You can have a successful career beyond bankruptcy. I know a rep that had one 8 years ago, he is just fine. It is part of his U-4 forever. I would exhaust all options before doing it, but doing it isn't necessarily the end.


I agree with the Dave Ramsey comment. He can change your life, if you follow his simple steps. You must change your behavior. If you can get on top of this and take control, you will be fine.
You have the choice and the power...........let it control you.........or you control it.
Good luck to you.......hang in there.
Apr 12, 2009 12:52 pm

Both of the million dollar guys in our office have left and took deals at the very end of last year.  They were both dead broke, they had taken deals to come to MS and they ended in 2006.  Their gross was dropping fast year end 2008 (both would be way under 600K in 09 staying, now doing 15-20K at the new place), and they needed to do something and they both went to UBS.  One guy had to borrow 15K from me to pay his property tax in December.  You are not the only one out there, big and small guys all over the place are in trouble.  If the rumor of UBS canning guys under 400K is true later this month, and it starts to spread that's the beginning of the end for most wirehouse brokers, me included. 

Apr 12, 2009 1:03 pm

I think that all of the wirehouse will follow UBS. Most have actually done it by not offerring deals/retention packages to those under $500,000. It is simpley the economics of the wirehouses. There overhead is to high versus the regionals.



The regionals like Stifel, Baird etc. will grow FA headcount a lot as the $250,000 - $500,000 broker is very profitable to them. Also, there is nothing wrong with the regional firms products and services.

Apr 12, 2009 1:05 pm

You are not the first and will not be the last.  I look around my office and wonder how some of the advisors who are down 30-40% and still living the high life are doing it.  I imagine one or two of them are in a state similar to yours.

 
Maybe now is the best time to reflect and determine whether this is the career you want.  If so I am confident you will make it work.  If not, there is some pleasure in realizing that and moving on to what you really want to do.
Apr 13, 2009 7:30 am

Unfortunate   Bankruptsy on U4 not good. Try to work it out. Go see a lawyer...maybe they can delay until you get bonus in Sept. Then make a decision.

Apr 13, 2009 9:26 am

If it is credit card debt, call the credit card company and explain your income problem(just to let you know, they probably know you don't have the money to pay.) A lot of banks are looking to cut credit lines and will do almost anything to do so. I talked to BAC two months ago about lowering my rate(12.99) and they said if I closed the account then they would take it down to 4.99.... So I closed it, much easier then xfering a balance and 4.99 fixed is a rate I will take...and so will the bank because they don't have to worry about my credit line anymore..


Dave Ramsey has some good ideas if  A. You have the income B. Aren't already cutting back on things like $5.00 Starbucks C. Are willing to get a second job.  Other than that there is nothing special about his method. Build up a savings(yeah thanks for that tip) pay off your debt in smallest to largest increments and live with in your means... I think if people can't do the third then the first two are kind of hard..
Apr 13, 2009 12:44 pm
fritz:

Both of the million dollar guys in our office have left and took deals at the very end of last year.  They were both dead broke, they had taken deals to come to MS and they ended in 2006.  Their gross was dropping fast year end 2008 (both would be way under 600K in 09 staying, now doing 15-20K at the new place), and they needed to do something and they both went to UBS.  One guy had to borrow 15K from me to pay his property tax in December.  You are not the only one out there, big and small guys all over the place are in trouble.  If the rumor of UBS canning guys under 400K is true later this month, and it starts to spread that's the beginning of the end for most wirehouse brokers, me included. 

 
I'm sorry if I sound naive about this, but how does this possibly happen????  I'm not going to kill the guys since they sound like they may be your friend since you gave them a nice chunk to borrow, but if they're million dollar guys, the least they are grossing income-wise is a quarter-mil.  The LEAST they are grossing is that.  Don't you pay property tax on your mortgage bill each month?  I just cannot fathom how someone could gross that much biz and need to borrow money from a friend to pay off a bill.  Unless they sold themselves annuities and the money is tied up, ha ha.
Apr 13, 2009 1:42 pm

It's because guys like that tend to think they're invincible and they can't possibly see their income drop by 40%.  So, they set up their lives to meet their income.   That's not just a 3/2 house.  It's the trophy house they "deserved".  Probably 7000 sq feet, 5 beds, 6 baths, pool, bar, media room, etc.  And of course the huge mortage to go with it.  And you can't park a Ford Focus in your 7000 sq ft house.  It has to be German with lots of letters and numbers on the trunk lid.  Private school, lake house, $5000 suits, blah blah blah.  They probably tell their clients to live within their means while their banker runs the numbers and tells them they can afford the second house in AZ for the winters.  

 
Thus the reason we're in the mess we're in.   
Apr 13, 2009 3:49 pm
Spaceman Spiff:

It's because guys like that tend to think they're invincible and they can't possibly see their income drop by 40%.  So, they set up their lives to meet their income.   That's not just a 3/2 house.  It's the trophy house they "deserved".  Probably 7000 sq feet, 5 beds, 6 baths, pool, bar, media room, etc.  And of course the huge mortage to go with it.  And you can't park a Ford Focus in your 7000 sq ft house.  It has to be German with lots of letters and numbers on the trunk lid.  Private school, lake house, $5000 suits, blah blah blah.  They probably tell their clients to live within their means while their banker runs the numbers and tells them they can afford the second house in AZ for the winters.  

 
Thus the reason we're in the mess we're in.   



Indeed.

This is why I'm having a tough time feeling much sympathy.

How can someone who claims to be a financial advisor get themselves into a mess like this where they are so over extended?

Apr 13, 2009 4:52 pm

I know a handfull of guys who had to file after the 2001-02. It shows up under brokercheck. However, when I still had my 7 (pre RIA) I would always tell prospects to pull up my record to show I was "clean". 90% couldn't figure out how to do it. Those who could, didn't understand what they were looking at.

 
With that said, I think you need a good reason why you are filing. A buddy of mine filed after his wife had cancer. Their insurance didn't cover everything and they were left with a pretty big bill. He has always been upfront with it and has never had anyone make a big deal.
 
I understand where you are coming from. Back in my wirehouse days, I rememeber the sales managers (we had 3 in our branch) would try to get everyone pumped up by telling them what the next expensive thing we would buy. Everyone had a new car. We all had picutres of the big house we would buy someday. Looking back, the culture was you would work harder if you had more obligations. I admit that I got caught up in it too. If I had a 40% plus decline during those years, I would have been wiped out.
 
I would look take a hard look at your business and decide what the next five years will look like. Best of luck to you.
Apr 13, 2009 5:48 pm
HymanRoth:
Spaceman Spiff:

It's because guys like that tend to think they're invincible and they can't possibly see their income drop by 40%.  So, they set up their lives to meet their income.   That's not just a 3/2 house.  It's the trophy house they "deserved".  Probably 7000 sq feet, 5 beds, 6 baths, pool, bar, media room, etc.  And of course the huge mortage to go with it.  And you can't park a Ford Focus in your 7000 sq ft house.  It has to be German with lots of letters and numbers on the trunk lid.  Private school, lake house, $5000 suits, blah blah blah.  They probably tell their clients to live within their means while their banker runs the numbers and tells them they can afford the second house in AZ for the winters.  

 
Thus the reason we're in the mess we're in.   



Indeed.

This is why I'm having a tough time feeling much sympathy.

How can someone who claims to be a financial advisor get themselves into a mess like this where they are so over extended?



The same way a doctor with a broken arm can tell one of his patients, with a broken arm, to get a cast.

Apr 13, 2009 5:51 pm

Just to piggyback on this, if you walked away from a mortgage, foreclosed on it, would that impact your record?