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Debt cloud hangs over Trump post-presidency

President TrumpDonald TrumpBiden to sign executive order aimed at increasing voting access Albany Times Union editorial board calls for Cuomo's resignation Advocates warn restrictive voting bills could end Georgia's record turnout MORE faces an increasingly challenging financial future after he leaves the White House on Wednesday.

Trump is on the hook for hundreds of millions of dollars of debt, most of it due within the next four years, and the legacy of his presidency may leave him with few options to pay it off.

In the wake of the Capitol riots, the New York City government and the PGA of America backed away from business arrangements with the Trump Organization, sapping future income from the debt-laden president. Three banks have announced they’re cutting ties with him — including Deutsche Bank, his biggest creditor — limiting his ability to refinance debt.

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“It strikes me that the president is going through a collapse of his financial goodwill,” said John Pottow, a commercial law professor at the University of Michigan.

“There's a bunch of corporate actors who are running away from him, like Deutsche Bank, so I think the last thing they want to do is to refinance him,” Pottow added.

If more banks deem Trump a toxic client, he could face daunting obstacles in navigating his debt.

Trump owes creditors at least $315 million, mainly through mortgages for Trump Organization hotels, resorts and golf courses, according to his 2020 financial disclosure. A Forbes analysis of Trump’s finances, however, found that Trump likely owes at least $1 billion to creditors, some of which he has personally guaranteed.

“Debt he's personally guaranteed means that those lenders can get access to all the equity he owns in all of his other companies,” said J.W. Verret, a financial law professor at George Mason University and former House Republican aide who supported President-elect Joe BidenJoe BidenBiden to sign executive order aimed at increasing voting access Myanmar military conducts violent night raids Confidence in coronavirus vaccines has grown with majority now saying they want it MORE’s campaign.

“His personal wealth can take a hit,” Verret added.

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Trump still holds considerable wealth through his business and claimed to have at least $1.4 billion in assets in last year’s financial disclosure, a self-reported document that is not audited by the federal government. Just $5.8 million of his holdings appear to be in cash or other assets Trump could quickly liquidate in a crunch, according to an analysis by The Hill.

A full picture of Trump’s financial health is impossible to assemble without the tax returns and other financial documents he has refused to release for years. Even so, experts say that based on what is known about his wealth and obligations, the president could face a barrage of lawsuits and collection attempts that could ultimately lead to personal bankruptcy.

“Absent the consent of the lenders, he has no option other than filing for bankruptcy,” Pottow said. “I mean, that's just the way it works. If you owe someone money and you can't pay it, then they can either forgive it or they can sue you.”

Trump, who anointed himself “the king of debt” in 2016, borrowed heavily to finance his empire of hotels, resorts, skyscrapers and golf courses. The president has argued that the amount of debt he owes is common for a man of his wealth and industry and has regularly used provisions of the tax code that help real estate developers write off losses.

While Trump was able to tap millions in borrowed money to expand his business and bolster his image as a cunning dealmaker, experts say he did so at severe personal risk. The New York Times reported in October that Trump personally guaranteed hundreds of millions lent to him by Deutsche Bank, using his own assets as collateral to purchase properties and refinance other debt with the scandal-ridden lender.

Deutsche Bank has several ways to collect on Trump’s debt, most of which matures in 2023, according to Trump’s financial disclosure. The bank could sue Trump if he fails to pay the debt by the time it matures, backtrack on its decision to cut ties with Trump and refinance, or sell the debt to another lender.

Professional Bank, which also recently cut ties with Trump, likely has similar flexibility with the at least $5 million in debt the president owes through a mortgage on a house he owns in Palm Beach, Fla., according to his financial disclosure.

That’s likely to put Trump in a financial bind.

“Oftentimes, borrowers will simply roll over the loan, which means they just swap the loan for a new loan,” said Phillip Braun, a finance professor at Northwestern University.

“Trump may have difficulty doing that because no one wants to provide him with new credit. So that's a serious problem for him,” Braun added.

Trump has faced dire financial straits before and may still have ways to maneuver out of his looming debt troubles. Other creditors could purchase Trump’s debt at a steep discount and give him more time to pay it off.

“At the end of the day, they're not going to light money on fire because they're angry at Donald Trump,” Pottow said.

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“If they have a reasonable restructuring proposal that's going to get them paid off without undue risk, they will come to a deal,” Pottow added.

Trump could also start selling off properties or stakes he holds in real estate projects to cover his cash crunch, though Braun said the president may be more likely to turn to the courts as he has in the past.

While Trump’s financial liabilities may be manageable for now, potential legal trouble might make his debt insurmountable.

New York state prosecutors are ramping up their investigation into Trump’s business dealings, which could lead to criminal charges. The attorney general of Washington, D.C. has sued the Trump Organization over the use of funds from the president’s 2016 inaugural committee, and legal experts say Trump could face charges related to the Capitol riots.

Verret said that, along with steep legal fees, a criminal indictment could prompt Trump’s creditors to speed up the collection of his personally guaranteed debt under certain debt covenants.

“As this pressure grows, the pressure on the lenders to accelerate payments grows, which limits his ability to get loans from anyone else,” Verret said.

“I don't know if he's in a debt spiral yet, but I have to figure that’s where this is headed,” Verret added.