Minnesota Litigation Attorneys

Collection Of Loans And Debt In The New World.

Minnesota Debt Collection

As uncertainty continues to permeate our economy more and more debtors have difficulty paying their bills.  A creditor or borrower is in constant competition with those similarly situated and must fight for position and priority in the collection of the debts owed to them from various borrowers and debtors.  Often times a creditor or lender makes life difficult or easy for itself based on how the underlying transactional documents were prepared by the creditors/lender’s attorneys and the forth sight that was used in the initial stages of the contractual negotiations for purposes of providing the creditor/lender with remedies and easy access to the debtors/borrowers assets and sources of income for security collateral as each particular situation may provide.

It is very important for a lender/creditor in the early application process to obtain the necessary information on a particular borrower or debtor which could be used in the collection process to help the creditor or lender collect the monies due it.  Financial statements information with respect to places of residence, social security numbers, driver licenses, spouses and relatives, bank account numbers and bank locations along with the employment information are all crucial to the collection process, and can save lots of time and money in pursuing the particular debtor or borrower.  Such information is also in most cases easily obtained from a particular debtor or borrower at the time that they are applying for a loan or lease or any type of credit.  In addition to the background information which is critical to the collection of unpaid loans or debts perhaps the most significant aspect of debt collection is lenders or creditors ability to obtain personal guarantees and not only from the debtor but also the debtors spouse in any arms length transaction.  If lender or creditor has in its possession the personal guarantee of a debtor’s spouse the likelihood of success on collection for that particular account arises exponentially.

Other significant language which needs to be in every contract between a lender and a borrower or a creditor and a debtor deals with the default provision of a particular agreement and the language contained therein with respect to their responsibility of the debtor or creditor for all costs, disbursements and reasonable attorney’s fees plus interest in any collection process that has to be initiated by a lender or creditor.  Similar importance are acceleration clauses where the lender/creditor can make the entire debt come due and owing upon a default by a debtor or creditor.  Jurisdictional provisions along with choices of law are also of equal importance.  One is dealing with an out-of-state or foreign debtor or creditor and if one or more debtors or creditors are involved they joint in several liability provision is necessary.  These provisions only highlight the importance of having the proper language in any agreement and are only a few of many such provisions that must be included in any lending situation in which optimize a lenders/creditors ability to put a squeeze on a defunct debtor and to optimize the chance and potential for maximum and complete recovery of all amounts due and owing pursuant to any particular agreement.

Debt collection practices in general are regulated by the Fair Debt Collection Practices Act and the act was enacted to eliminate abusive debt collection practices by debt collectors including those practices that are false, deceptive, unfair or harassing.  Any creditor or lender that does more than a handful of debt collection activities a year must comply with the FDCPA.  The FDCPA limits debtor collector’s ability in terms of ways he or she can communicate with the consumer/debtor directly.  The debt collector cannot communicate with the debtor at an unusual time or place, communicate with the debtor directly if the debtor has an attorney to represent him or her regarding the manner of debt or communicate with the debtor’s place of employment.  Although the FDCPA applies to business debts in very few incidences it is still in all cases very important to use a formal process in collecting on any type of debt.  Any letters sent to debtors should be identified as attempts to collect debts and that any information obtained through that process will be used for those purposes.  Where collateral is involved a self-help process or repossession should be used with extreme caution with recourse to court of law always being the best and the safest alternative.

The collection of a loan or debt should begin with the review of the initial financial and personal information provided by the debtor followed up with a notice letter to the debtor and any guarantors or cosigners both certified and regular mail indicating that such and such amounts are due and owing and if not paid within a specified period of time legal action will be initiated.  If a positive response is not thus obtained by way of notice letter, a credit search or an asset search should be done on the debtors and any guarantors who determine their ability to pay for the outstanding debt and thereby assess the chances of collection of all of the amounts due and owing to the lender/creditor.  The asset search also will help the lender/creditor to determine whether the initial disclosures made by debtor or borrower during the application process was accurate or misleading and will assist the lender/creditor in any negotiation process which normally takes place in the debt collection process.

If the response to the notice letters has been negative and after a preliminary review of the file along with an asset search of a particular debtor has been conducted, the next step is to serve the debtor and any cosigners or guarantors with a formal legal complaint which incorporates causes of action for breach of the underlying agreement whether they be lending documents, leases, promissory notes or any other type of agreements, accounts for conversion or misappropriation of property if collateral is being retained by a debtor has an obligation to transfer such to the lender/creditor pursuant to the parties agreement or were in cases of leases property is leased and not returned by the lessee, and accounts for misrepresentation or fraud based on false financial statements and information provided to the lender/creditor during the application process by a particular debtor.

The accounts for conversion, misrepresentation and fraud dealing with financial statements are very important with the respect to debt collection process involving a bankruptcy were accounts for judgments for conversion, misrepresentation and fraud are very difficult to discharge in a bankruptcy process.  If a settlement is not reached after the service of a Summons and Complaint on a debtor and a judgment entered in the lenders/creditors favor which includes attorney’s fees and costs involved in the collection of the particular debt plus interest, judgment is registered in the county where the debtor resides or may have other property and such judgment severely hampers the ability of a particular debtor or creditor to obtain any type of financing without first paying off the judgment of a particular lender/creditor.  In addition, the lender/creditor may levy upon the bank accounts and assets of a particular debtor/borrower and may also garnish wages from the employer or the particular debtor/borrower for purposes of satisfying the judgment rendered in its favor by the court.

Parker & Wenner has been helping lenders/lessors and general creditors of all nature and size to successfully collect debts owed to them by both businesses and the public at large.  Parker & Wenner has a very high success rate in collection debts for its clients and has pursued successfully pursued debtors/bars in virtually every state in this country.

For questions about your debt collection, please call Boris Parker at (612) 355-2201 for a free telephone consultation.