I have a buddy in a pinch. He did a large Wells Fargo debt consolidation loan during a previous marriage. I think in the $50-$60k range. Got divorced and couldn't pay it. Now WF is serving him with a lawsuit. He came to me asking for advice and says he doesn't have money for a lawyer. His only asset is his personal home. What is Wells Fargo's angle here? Someone else told him he should file bankruptcy but that seems extreme? Any other better options?

If he has, or can get, a copy of the promissory note then it should be pretty easy for his lawyer to respond in kind. They have lots of rights to sue. The ex may have liability as all of the conditions in the note are going to be joint & severable.

Let's say they forgive the debt, he'll get a 1099c. He's not going to try and run from the IRS I assume so the floor of his liability here is at least the tax liability generated from 50-60k income. If that's his floor, then he knows how much he can spend on a lawyer and a settlement.

If the lawyer thinks they can go lower, good on them.

Either way, he's going to have to respond. If he doesn't WF will get a default judgment against him.

Thanks. And the option for bankruptcy?

I don't think that's what I would pursue in that situation but I'm also not a lawyer and definitely not a bankruptcy lawyer.

I think it would be highly likely that WF would take a haircut on an unsecured loan. Between that and the fact that his ex likely has some liability to the debt, I would go the negotiation route. If the loan came after the divorce, that's different but not necessarily terrible....particularly if he was consolidating debts that she was liable to in the first place.

ETA: It would be worth looking at the income test for Chapter 7 and going through that calculation...he may not even qualify for liquidation then he'd have to go to 13 (repayment). If he went to 13 then he probably would have been better off negotiating with WF anyway - would be much cheaper from a legal fee standpoint anyway.

Settlement can be a good option. If WF thinks he has limited assets and income, they would be willing to take a settlement between 25% and 50% of the amount owed, because if he files for bankruptcy they may get quite a bit less.

You can generally negotiate a settlement yourself, although he needs to be guarded with what information he shares with them. They will ask questions like, where are you employed, how much money do you make, etc.