Forming your strategy
After you have located the debtor
and have the necessary information about your debtors and their assets, its
time to decide which is the best, cheapest, fastest, easiest way to recover
your
money from them. Use your own judgment here (pun intended).
Usually, wage garnishment, liens against house and cars, and a bank account levy does the trick, but you
probably know more about your debtors than anyone else, particularly now that
you have all that information.
However, although you now have a
lot of power, you must take into consideration that if you make life to tough on
the debtors they may file for
bankruptcy. That would not usually be in your best interest
so you have to use some care in deciding how to proceed. The risk of a
debtor filing bankruptcy usually decreases as the value of their assets
increases. And, under current law, an individual cannot file another bankruptcy for 7 years after
filing one. Finally, the good news for landlords is that the new bankruptcy
law effective in 2001 makes it more difficult to discharge debts. For
information about bankruptcy law visit the legal sites listed above or visit the
site of the American
Bankruptcy Institute.
Some judgment collectors report that
more than half of their debtors respond to a letter inquiring if they would like to work something
out, especially if it's been
a while since the judgment was obtained.
Making a small compromise might encourage them to pay up. For example, you
might offer to waive the interest if they pay all at
once. Or you might set up an acceptable payment plan, with the original interest
continuing
of
course. Doing this can provide
extra income each
month.
If you decide to
offer a plan of any kind, don't give them more than 10 to 15 days
to
make up their mind. Make the letter
business-like and to the
point. Do not make threats. You especially don't
want to disclose
any of your plans regarding available recovery
tools. Just offer them a chance
to settle the matter
and get it behind
them. It should be clear to them that you are not
going to just forget this matter and give up.
To Seize or Not To Seize, that is the question
Actually
forcing the sale of a home, car, boat, etc.
is usually a
lot
more trouble
than its
worth. It can end up costing a
lot of
money and possibly even
result in
legal problems. Placing a lien against the property,
whether it be a house or vehicle, is usually
effective enough. The debtors can't sell the property or borrow money against it
without paying the debt.
When it comes to seizures,
there is exempt and non-exempt property. A list of non-exempt property for a typical state follows. Check
the laws of the specific state of interest.
-
Rental Properties of all types
- Business Income Vehicles (including RV'S and boats)
- Bank Accounts (25% or more)
-
Wages (25%)
- Personal Property Business Property
- Security Deposits Third Party Property
- Judgments That Are Owed To Your Debtor (you may find some)
- Anything else of value that is not
specifically exempt.
Exempt property for a typical
state might include the following. Again, check
the laws of the specific state.
-
Life insurance policies and disability insurance income
- Social Security, veterans', welfare,
unemployment and workers' compensation benefits.
- Some household property
- Child support
- In most states, some or all of
public and private retirement benefits, including 401k, IRA, and Keogh plans
NOTE:
Michigan, and some other states, now allow a landlord to garnishee 10%
of a welfare recipient's grant to satisfy a judgment for damage to a
rental property.
Your debtors have only 15 days to file an exemption claim after the sheriff
serves the notice of levy. They
may not even know that they can file an exemption or, even if they do, they may
not be able to prove the specific sources of the funds seized.
|
