It’s a long, long story, but I foolishly loaned my former ATF $5K. She signed and had properly notarized a pretty decent standard unsecured personal loan agreement that I got off the net. Besides all of the standard boilerplate the agreement has an “immediately due and payable upon demand” clause that I would like to invoke.
Can I attempt to recover the money on my own and what are the ground rules?
What is the definition of immediately?
Do I get to specify like 10 days and if I don’t get the money can I declare the loan in default own my own? Or is that only something a court can do?
I don’t think she is going to pay it all back upon demand. If she had the money she wouldn’t have needed the loan. The loan agreement also has a provision that once in default the borrower has to pay all reasonable recovery fees. Does that mean I should wait for the loan to be declared in default before retaining an attorney and collection agency to get the money for me? If I hire them too soon does that prevent me from recovering their costs? I don’t want to get caught up in a catch 22 situation.
I just need to know the first couple of steps to take.
Any advice anyone out there could offer would be great.
I have successfully done this.
An unsecured loan is always just that. You need to pay lawyers to think of the obvious, ie., what happens in case of default?
Well, she might skip the state, or even the country. Not likely any skin off her nose.
You might sue on the note, and get an order that she pay, and get to take her into a debtor's exam to find out what you already know: she doesn't have the money, and you can't take a lien on her ass (since the 13th amendment). If, of course, she bothers to show up. Or tell the truth. You should forget about a debtor ever telling the truth.
Or you can renegotiate. I'm guessing you're not going to be real good at that, from your track record.
But MrFisher has a much better idea, try to take it out in trade. This is the winningest scenario - if you're good, you might even make her happy about it, and get some extra on the side, eh?
If she hasn't split already, it's because she has something holding her there - business, social ties, inertia, no money, you can't know. The more you DO know, the better off you're gonna be.
And forget the "due on demand" shit. You're still not getting it - for whatever reason, she doesn't keep her promises, and you don't have security. Insisting it's all due on demand will just piss her off or make her desperate, and you'll be farther from any good result.
...(say, two weeks from date of receipt of letter), and if you don't get paid, take it to your local small claims court.
A written demand, certified mail, with a 15 day demand is sufficient. Small claims is the best way to go if she fails to pay. If she wants to pay in installments, write up an installment note otherwise she'l say the first payment was what you agreed to take in settlement for the entire debt.
A small claims judgment should be recorded with the county recorder. It will then appear on her credit record and she won't be able to get credit until you're paid off.
Here is the problem. You may get a judgement in small claims court, but collecting it is another story. It's true that if you get a judgement, it will be recorded, and the provider will have difficulty getting credit. Other problem is that many providers do not care about credit because they are working off the books anyhow.
You can try a collection agency, where there will be no up front costs, as they will work on a contingency basis. Some agencies offer credit reporting at no cost.
By the way, you are under no obligation to send any letters or demands prior to sending your case out to an attorney or an agency. The agency or attorney will be obligated to give her 30 days notice to dispute, in accordance with the fdcpa.
So, forget an attorney! Either use an agency, or use small claims court.
The due on demand clause probably "accelerates" the obligation to pay the whole amount once YOU rightfully declare the note in default. It just takes a letter saying the note is in default because of (specified) missed payments and that the entire amount is now due and payable. Any time table you give her to pay up should be just to avoid the lawsuit, not to delay causing the note to be in default. Sue in whatever small claims court your state/city/county has. You might have to spend $100 on a process server, since she must be served with the suit papers. You could hire a collection lawyer and the court would tack on what it feels is a "reasonable" attorney fee (10-25% typically). Go watch a morning of small claims court to see how it's done and see if there are collection lawyers there you could talk to about taking the case. As others have said, though, getting the judgment just officially gives you the right to use the courts to collect and puts a black mark on her credit rating. You can then try to attach property or bank accounts (heh) if you can find any.
I assume your former ATF doesn't have goon friends to discourage you from pursuing this course.