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SW KS, near Dodge City | Do you have any idea what numbers he's using? I don't. I simply know he said his net worth declined by 10-15%. Maybe he had his tractor at $50K and he was revaluing it at $45K. You're saying he should keep it right at $50K, with no depreciation. I'm not sure how it works in IA, but out here, equipment does depreciate.
We don't know the specifics of his situation at all. Your advice is simply "make it an adversarial relationship with your banker by making your banker tell you that you need to move values down". Guess what happens when banks have to start making decisions for people? It gets bad. Why? Because at the point the bank has to start making decisions, it becomes all about what's good for the bank. Now, if a borrower recognizes problems and works to correct them, it is a LOT more of a situation of "let's do what's best for all of us". We continue to have and make loans to customer's that we've had to write off debt on. I know several banks that do the same thing. Why? Because sometimes stuff just happens and things don't work right. We as lenders know that the majority of people will try to do the right thing if given an opportunity. So we charge off some debt to get it kosher w/ the regulators, and have the charged off loan setting there with the borrower a lot of times paying on it as they can to get things square. Obviously, there are limits to this kind of thing, but it still happens. | |
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Net worth declining
