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People don't often think of debt and asset protection in the same context.
Take for example 2 real estate investors, each with a single rental property worth $100k
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Take for example 2 real estate investors, each with a single rental property worth $100k
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If you were a Karen trying to find somebody to sue, would you rather go after:
Jim Equity that owns the property outright with no mortgage?
Jim Equity that owns the property outright with no mortgage?
or John Debt that owns the property but has an outstanding mortgage for $80k?
You can bet your sweet booty that Karen is going to get her lawyer Bill to file a claim against Jim Equity! If Karen & Bill win the claim, they'll gain full access to all $100k worth of property
Whereas if they had decided to go after John Debt, they would need to pay off the bank their $80k, and only be left with $20k.
If Bill Lawyer is charging Karen $200/hour and it takes 50 hours of work to complete this case, Karen owes Bill $10k, so she ONLY WALKS AWAY WITH $10k FOR HERSELF.
COMPARE THIS TO THE $90k SHE CAN WALK AWAY WITH IF SHE GOES AFTER JIM EQUITY.
COMPARE THIS TO THE $90k SHE CAN WALK AWAY WITH IF SHE GOES AFTER JIM EQUITY.
The lesson here:
Debt is not always bad and can have a really powerful silver lining when it comes to asset protection.
Debt is not always bad and can have a really powerful silver lining when it comes to asset protection.
The same principles here can apply to your personal residence or anything you own, not just investments. I bet Karen would love to lay claim to that flashy boat you paid all cash for 
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