Archives for April 2012

Avoiding mortgage and debt relief scams

This little article in the New York Times caught my eye. It points out how some desparate homeowners are being scammed by companies claiming to be able to help with mortgage relief.

There is a lot of hype about mortgage relief. And there is a cottage industry of companies that promise to reduce your debts through negotiation (these are called “Debt Relief” agencies). The consistent thread I see is that it is hard to predict who gets what results from lenders and when. But here are some things to remember:

1. No lender is required to modify any mortgage or other loan. It is a contract. If the lender is going to give you something, they are going to want something of value in return.

2. Reputable professionals do not make promises of specific results when it comes to loan modifications. They can give you opinions on possible or likely outcomes.

3.  A licensed attorney in your state may require an up front deposit, but you are entitled to have a clear written explanation of what fees are going to be based on.

4. A loan modification may be the right move for you, or it may not. You need to explore all the alternatives.

5. Finding the right professional for you requires some research. Stay with recognized professionals with whom you feel comfortable.

How small family owned businesses succeed, and how to avoid feeding a failing enterprise

Here is a great little article from the New York Times explaining what attributes are common to small family owned businesses. Recommended reading.

In our experience the watchword for business owners is “fail to plan, plan to fail”. These businesses do the following:

1. They stay on top of their game, and stay flexible, ready to find and meet the needs of their customers and of the marketplace.

2. They make everyone pull his/her weight, and avoid favoritism to family members. I would add that business owners who develop a sense of entitlement to a certain income or livestyle can be the downfall of the business.

On the other hand, many business owners do not do the converse: make the business pull its weight, and if it is not then start asking hard questions.. Instead, they blindly put money into a failing business without asking the tough questions, why this is necessary. We all know some businesses are cyclical, and have to get through the lean months to make money in season. But if the good times are not enough to pay off the deficit run up during the lean times, all that happens is that the owners end up further and further in debt until they run out of money. Long before this happens the owners need to take a hard look at what is happening.

3. They seek out and get qualified advice from attorneys and accountants.  This follows from the “fail to plan…” thought above. Sometimes early advice from a trained and objective outsider can be just what is needed to get back on track.

With years of experience advising business owners, and in dealing with the aftermath of failed businesses, we know how these sad results can happen. Business owners who think they must contuinue to run a failing business need to explore the alternatives, and the ways they can avoid the vicious trap of feeding a failing business. Too often the end result is an avoidable or far-too-costly and painful business bankruptcy.

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