Promissory Note – What To Do When The Payer Misses Payment And Doesn’t “Know” When He Can Pay?
Forced by circumstances or being in “no choice” situation, I accepted a Promissory Note, which is “secured” only by words on the note. This means that wording on the note says, that this note is secured by all the assets of the person who issued this note. However, the person who issued the note does not own his residence. This I know for sure. I have no way to find out what real properties does he own if any and, of course, this Promissory Note is recorded against NO property, which makes this note actually NOT secured. The note also says that should the payer default, I can call the note due and request the entire amount.
The person, who issued the note, made first payment at the time the note was signed and on the second payment he is 2 weeks late.
I called him on the phone few days after the payment date to ask when am I going to receive my next check, he was not able to give me any finite date, except for “Wait, you will get paid”.
Now it’s 2 weeks behind and I wonder, what steps should I take to enforce the agreement?
You might ask, why am I asking this question on RE forum. Well, the promissory note I accepted is a payback of my RE investment from the General Partner who failed to deliver partnership interests for extended period of time and also did not honor his other promisses.
Please advise.
Olga,
It sounds like, you got into a situation that you knew beforehand was not good. With an unsecured notes, in order to collect I believe you have to get a judgement. When you get a judgement, you would need to find debtors assets, if any. If you find assets, you could try to collect. I believe this is not an easy process, and that is why there are collection agencies that specialize in doing this. Good luck with this.
You will have to first file a lawsuit and win a judgement. Depending on state law there is a certain period of time before you can file another lawsuit to try to get at their assets.
I would highly recommend using an attorney although the cost of litigation may exceed what the note was origionally for.
The good news is that a judgement will likely have to be paid off before this guy will ever be able to get a house or possibly car loan.
Thank you for your replys.
I feel I have to write an article or post a big topic about the case I had.
Proceed directly to small claims court.
Actually it will depend on the amount of the promissory note, and your state laws. In NC, small claims are limited to $4000. Anything over that has to be done through an attorney.
Good Luck!