Creditors dealing with defaulted debts often deal with the same quandary: how to quickly take possession of the property to offset the debt. However, it’s possible for your collateral to be at risk in criminal matters, and even in possession by a third party such as a repair shop, government agency, or a family member.
In the fifth episode of Coffee With Casey, shareholder and Chicago office managing attorney Casey Hicks
shared a cup of coffee with attorney Stefanie Kempfer Collier
as they discussed third party in possession in collateral recovery. Together, they reviewed key topics including:
- How to get collateral back from a third party
- Storage and repair shop charges
- Criminal matters and police holds
Here are our top four tips shared during this engaging session:
1. Determine who has possession.
Who has actual possession of the collateral? If it’s someone else besides the borrower, such as a storage facility, government entity, mechanic shop, or family member, you will need that information in order to file a replevin action or to file a motion to intervene within a criminal matter. Timing matters, so do not discard any notices you receive from a third party in possession.
2. Ensure documentation is ready to go.
Before filing a replevin or a motion to intervene, you want to make sure you have all documentation ready to go. This may include:
- A copy of the contract and security agreement (e.g. note, retail installment contract, or lease)
- UCC financing statement or certificate of title
- Reason for default
- NADA value of collateral
3. Do you have to pay storage fees and repair costs?
Make sure you have a professional inspect the repair work before paying for any repair fees. Storage fees are state specific and have notification requirements. Check with your attorney before paying any storage fees to make sure facilities met notification requirements and are charging reasonable fees.
4. Consider the condition of the collateral.
Is the value of your collateral enough to pursue legal action or pay for the storage fees and repair costs? If the cost to recover, fix (if wrecked or damaged), store, etc. the collateral is more than its value or more than the amount owed on the contract, sometimes it is more worthwhile to sue based on the balance of the note.
Did you miss this episode of Coffee with Casey? Watch it here
This blog is not a solicitation for business and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.