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The Creditor's Page

The Creditor’s Page is published by Clark C. Kingery, P.A., Attorney at Law for informational and educational purposes only and should not be construed as legal advice.

AUGUST 2016: TIPS FOR COLLECTING JP COURT JUDGMENTS

By Clark C. Kingery, Esq.  

The vast majority of judgments entered on behalf of landlords in the Delaware Justice of the Peace Court are never satisfied.

Why? One main reason is that most creditors (especially landlords) lack a long-term debt recovery strategy. If they can’t collect quickly by way of voluntary payment, wage attachment or levy, they give up. As a debt collection attorney, I can tell you that they usually give up way too easily.

Of course, there are no guarantees in debt collection. But, if there is one single thing creditors can do to improve their chances of eventually getting paid, it is to transfer their Justice of the Peace Court judgments to the Delaware Superior Court.

Once a judgment is docketed in Superior Court, an automatic lien is created against any real estate the debtor currently owns, or later acquires, in the county. It is the “later acquires” part that can help creditors. Here’s an example of how it works - suppose you evicted a tenant in 2012 and were awarded a judgment for $3,500. Some time goes by and the debtor recovers financially; even wants to buy a home. If your judgment is recorded in Superior Court, most mortgage lenders will insist that the judgment be paid, in full, before giving your debtor a loan. They insist because, otherwise, your judgment lien will have priority over their new mortgage! The result: you receive a call asking for a payoff figure. What happens if the debtor inherits real estate? Your judgment will automatically attach to the property as a lien - and will have to be paid (in full, with interest) before the property can be sold or refinanced. The lien is good for 10 years, and may be renewed for another 10 years. It may be a long wait, but if your debtor is young or upcoming, it can be well worth the effort.

For more information as to how we can help, call us at (302) 428-1915.

JuLY 2016: GETTING PAID

By Angeline M. Kogut, Esq.

As a general rule, when a business provides a product or service, or when an individual or financial institution extends credit or makes a loan, they expect to get paid. Minimizing delinquencies and increasing the likelihood of getting paid requires creditors to develop an effective and efficient collection strategy. At a very basic level, an effective and efficient collection strategy requires:

  • Smart Lending
  • Solid Accounting Practices
  • Diligence and Persistence
  • Flexibility

In part, smart lending practices begin when a lender performs due diligence prior to the extension of credit; obtains well-drafted and completed credit applications; secures written agreements with default provisions; and, requires personal guarantees and/or security agreements when necessary. Solid accounting practices require accurate accounting and billing practices such as clear, timely and accurate invoices. Diligence and persistence require a consistent collection strategy including regular follow-up, issuing timely demand letters, and attempting phone-contact. And, in some matters, creditors that are flexible (willing and able to compromise or negotiate a settlement) may benefit from a quick resolution and perhaps increase overall net recovery by reducing the costs and fees associated with protracted collections and litigation. 

However, even with smart lending, solid accounting practices, diligence and persistence, and flexibility, collection of delinquent accounts can pose practical, economical, logistical and legal challenges. And, the reality is that not all debts are collectible.

JUNE 2016: INFORMED DECISIONS

By Angeline M. Kogut, Esq.

How should a creditor decide whether or not to pursue a collection matter?  

Creditors must make informed decisions before deciding whether or not to proceed with collection. And collection-attorneys must make informed decisions before accepting claims for collections. In order to make informed decisions, some of the factors creditor and counsel should consider include:

  • The amount of the debt
  • Whether there is sufficient proof of the debt
  • Jurisdictional concerns
  • The time and expense it would take to collect the debt
  • Whether there is a possibility of a counterclaim
  • The likelihood of collection
  • Whether collection would jeopardize an ongoing personal or business relationship

One of the services we provide is a "review and recommend" program designed to help creditors to make informed decisions.

Part of that service includes:  

  • Attempting to locate/confirm debtor’s current address and phone number (national search).
  • Determining whether debtor owns, or confirm that debtor owns, real estate within the state of Delaware.
  • Checking the Delaware Judicial Database for civil judgments and pending civil actions in which debtor is a named party.
  • Determining whether the debtor has filed bankruptcy (national search).
  • Recommending a course of action regarding collection of amounts due.

For more information as to how we can help, call us at (302) 428-1915.

CREDITOR QUESTION OF THE MONTH

At speaking engagements and seminars, creditors often ask questions about how to decide whether to pursue collections; preventative collection (collecting without filing a lawsuit); designing a collection system; and how to discover assets (finding property from which to collect). Each month, The Creditor’s Page will respond to frequently asked creditor question (or two).

AUGUST 2016: i OBTAINED JUDGMENT IN DELAWARE AGAINST MY FORMER ROOMATE. SHE BANKS IN WILMINGTON, CAN I ATTACH HER BANK ACCOUNT?

Unfortunately, no. Delaware does not permit bank attachments. However, Delaware does permit a judgment creditor to attach the wages of a judgment debtor. If your former roomate works in Delaware (or for a Delaware business entity) perhaps a wage-attachment would be productive.  For more information as to how we can help, call us at (302) 428-1915.

JULY 2016: I'M A  RESIDENTIAL LANDLORD AND MY TENANT HAS NOT PAID RENT FOR MONTHS. RATHER THAN FILE SUIT, MAY I LOCK MY TENANT OUT OF THE RENTAL UNIT UNTIL THEY PAY?

No, no and no. Under § 5313 of the Delaware Landlord-Tenant Code, a landlord is prohibited from utilizing this type of "self-help" remedy. In this scenario, if you lock the tenant out of the rental unit you have unlawfully excluded your tenant from the rental and may be subject to triple damages.     

§ 5313. Unlawful ouster or exclusion of tenant.
If removed from the premises or excluded there from by the landlord or the landlord's agent, except under color of a valid court order authorizing such removal or exclusion, the tenant may recover possession or terminate the rental agreement. The tenant may also recover treble the damages sustained or an amount equal to 3 times the per diem rent for the period of time the tenant was excluded from the unit, whichever is greater, and the costs of the suit excluding attorneys' fees.   

JUNE 2016: How do I collect money that I loaned to a friend or family member?

Of course, the answer to this question depends on several factors.

However, as a general rule, in order to increase the likelihood of collection a proper written agreement should be obtained before any money is exchanged.   

Get it in writing. Every time.  

It may feel uncomfortable asking a friend or relative for a written agreement. When asked why a loan was not reduced to writing, creditor responses have included “he was my best friend and I trust him” or “she is my sister and I never imagined she would break her promise” or “I was sure that my boyfriend/girlfriend was good for it” and even “he said he would leave me in his Will.”   

Loans to close friends and family can go bad. If they do, having a proper written agreement helps assure that the expectations of each party is clear. And, in the event that the loan becomes delinquent the written agreement is a great tool for avoiding misunderstandings (claims that the loan was a gift, or donation, or repayment of a prior loan, or given exchange for a service or good) and helps protect your interest if litigation is needed.


This communication is an attempt to collect a debt and any information obtained will be used for that purpose. This information is not intended to be legal advice.
If you have questions, please consult an attorney.

DISCLAIMER

PRIVACY STATEMENT

Clark C. Kingery, P.A., Attorney at Law, is a debt-collector. The information on this website is offered for general informational or educational purposes and does not constitute and should not be relied on as legal advice.

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