Our Investors Embezzled Over A Million Dollars (We Lost Our Income)

A couple running home-based businesses calls in after embezzlement by someone managing their investors' funds wiped out $1.6 million, slashing their income by 70-80%. Now earning $12,000 to $17,000 monthly (averaging $250,000 yearly but variable and lower post-loss), they face a $5,000 monthly deficit. They've exhausted savings, racked up $270,000 in non-mortgage debt plus $88,000 in back taxes, and turned to credit cards ($4,300 monthly payments including high-interest fees at 12-30%) and family loans. Total outflows hit about $20,000 monthly, blending household, business, and college costs for their kids. They're weighing bankruptcy but seek the smartest path forward.

Unpacking the Financial Hole

The callers explain the embezzlement involved investors' money they managed, not their own capital, but its loss evaporated their revenue stream. They responded by cutting non-essential business expenses, selling underperforming assets ("selling so much the kids think they're next"), and taking side jobs. Despite this, costs outpace income: $5,500 mortgage on a $700,000 home (owing $550,000 after refinancing to pull equity for debt), $3,000-$5,000 business expenses, $1,700 leftover college tuition/fees (kids have scholarships, grants, and jobs; aggressively applying for more), and the rest on credit cards and taxes from an employee who failed to file returns.