Defaults, personal property or real property, are processed both in and out of court. Personal property can include anything tangible, like a car or a loan; real property is land or property affixed to said land, like a home. The methods of collecting on a default, regardless of whether it is personal or real property, can be any of the following: mediation, litigation, filing/recording a judgment, recording a lien, judicial foreclosure, non-judicial foreclosure, and more! The default services associated with these methods vary from state to state, and should also be considered before initiating a case. To decide what option is best for your client, consider these 6 things:
Is the property real or personal?
Default on real property, dependent upon your state’s legislation, is handled both in and out of court through non-judicial and judicial foreclosure. The services associated with these types of defaults can include any of the following: property posting, publication, certified mailings, service of process, public auction, and Sheriff sale. Note, this is not considered debt collection, but is simply an action to foreclose the lien.
What is the amount of the financial recovery your client is seeking?
Dependent upon your client’s case, default dollar amounts and default types depict the court in which your matter can be filed/heard. Typically, Justice and Municipal courts hear small claims and personal property matters. Superior Courts and District Courts hear much larger, real property matters.
Do the fees and costs associated with collecting on the default exceed the default itself?
It’s important to consider what your client is recouping. Is the cost of legal action greater than the financial loss they’ve already experienced? Is the timeframe to seek judgement sufficient for your client’s financial needs? How likely is it that your client will receive a payout when the matter is settled? Asking yourself these questions will help you decide the best course of action for your client – ethically!
Does your client hope to continue a relationship with the other party once this matter is settled?
If your client is hoping to continue a relationship with the other party, how the case is handled can greatly effect that possibility. Some options are more flexible and agreeable to a borrower, while others are expedient and leave few options for a work-out.
What default services will be required for your client’s case?
Process service, personal or sub-service, is the most common method of giving Notice to a party. Personal service ensures your documents are handed directly to the proper party. While sub-service is sufficient in most cases, this entails leaving your documents with another person who intends to deliver them to the proper party. Certified mail is also a common method of providing notice and allows for notice to be provided to a more people at one time while keeping costs down. Again, the requirements for your state and matter can be found in your local legislation.
What should you look for in a quality vendor?
Before choosing a vendor, do some research and make some calls. An ideal vendor is responsive, transparent, and knowledgeable. Good communication and accessibility is ideal for tracking service updates and service completion. Your vendor should be able to provide fees and costs, or at least a ballpark, up front before initiating any work. Requesting fees and costs in advance will not only avoid ugly surprises when it comes time to bill, but will also give you the opportunity to bill your client in advance. Ask questions about local service guidelines; your vendor should be knowledgeable on what is allowed/not allowed. And most importantly, what does your instinct tell you? If you didn’t get a good impression over the phone, keep researching.
Regardless of what you, or the attorney you’re working with, decide is best for your client, ask yourself these questions before moving forward. Unnecessary action can cost your client time and money, and ultimately your reputation for advising poorly without fully understanding your client’s needs.