|
We are holding a promissory note for $85,000 that was lent by us to a
business. The note was at 6% interest, and the business has paid the
interest each month. However, the total note is past due, and we have
requested payment. The business owner has said he can't pay and makes no
promise to repay other than continuing the interest payments. How can we
find out what recourse we have to enforce collection of this debt? We live
in Texas.
Thank you.
|
| |
| |
Hi Ho Silver wrote:
We are holding a promissory note for $85,000 that was lent by
us to a business. The note was at 6% interest, and the
business has paid the interest each month. However, the total
note is past due, and we have requested payment. The business
owner has said he can't pay and makes no promise to repay other
than continuing the interest payments. How can we find out
what recourse we have to enforce collection of this debt? We
live in Texas.
I don't practice in Texas. The following is based on general legal
principles.
If there is no security for the note (I imagine you would have
mentioned if there were), your options are either to sue, wait and
see, or renegotiate.
The problem with waiting is that if you wait too long, you may lose
your right to sue under the statute of limitations.
Have a local lawyer review the note and tell you what your options
are. For the amount of money you are talking about, it will be a good
investment.
Stu
|
| |
| |
Hi Ho Silver wrote:
The problem with waiting is that if you wait too long, you may lose
your right to sue under the statute of limitations.
Consider rewriting the note. Contact the fellow and offer a new note with
the remaining balance as a balloon payment, so he can make interest only
payments without fear. Include an acceleration clause to trigger the entire
amount due if he misses an interest payment. You might also see about
working in some property as security.
It should make him happy because he's no longer in violation of the note,
and it should make you happy because now you have a fresh note (resetting
the clock) giving you more time to figure out options.
You might also see about filing a UCC-1 finance statement if security is
involved. Having something on record to put others on notice would be nice.
Promissory notes aren't normally recorded unless they are part of a
mortgage.
|
| |
| |
We are holding a promissory note for $85,000 that was lent by us to a
business. The note was at 6% interest, and the business has paid the
interest each month. However, the total note is past due, and we have
requested payment. The business owner has said he can't pay and makes no
promise to repay other than continuing the interest payments. How can we
find out what recourse we have to enforce collection of this debt? We live
in Texas.
You run a risk if you wait to pursue enforcing the note. Once the note
became due, the other party was arguably in breach of their contract
with you. At that point, the statute of limitations will begin to run.
You don't mention your state, so you will need to know the statute of
limitations on a contract in your state, here in WA, it is six years.
If you keep accepting only interest payments, than you might also have
waived or later be "estopped" or preventing from arguing that the
principal is not being paid as you will have effectively consented to
them only making interest payments.
As you are dealing with over $85K, I would not hesitate in contacting
a lawyer. If they are truly in breach, getting a judgment will
probably not be too difficult or the suit could force them to make
good on the note. Once you have a judgment, you can get a writ of
execution and have the Sheriff seize their property (real or personal)
and sell it to pay the judgment. IN the future, I would never
recommend giving anyone a note without a security agreement.
Regardless,You will not likely get any valid advise on a newsgroup.
Good Luck,
David
|
| |
| |
|
