Market for Unsecured Notes?

Question

Total shot in the dark but is anyone aware of any buyers interested in nonperforming unsecured notes?  I had my former tenant execute a promissory note for missed rent upon move out in exchange for withdrawing an eviction filing.  The note is accruing interest at 8.5% and has about 3 years before the statute of limitations will require legal action to be filed.  Not expecting much interest but you never know unless you ask.

Gene Chandler · Answer

I've collected on many thousands of that kind of debt when I was a landlord years ago. Most people stop at the judgment and expect a payment someday. "not gunna happen" In most cases. I went from Judgment to next finding out their assets and attaching them and if they did not show up in court I filed again using skip-trace search then if they did not show the Judge would place an arrest warrant out for them and "BEHOLD" they would show up wearing orange. The difference was I followed through the entire prosses. What State and County?   GC

Chad U. · Answer

There are several attorney debt collection firms that you can retain to pursue this for you.  One of them is Dyck O'Neil, and they take a contingency of whatever they recover.  However I believe they only take on debts of 25K+ to make it worth their while.

Chris Seveney · Answer

@Darius Ogloza

There are buyers but typically the pricing is around a penny on the dollar.

Rene Owczarski · Answer

You're welcome Darius. And my lien was for about $5,000-6,000, since interest was also accruing during collections.And I ended up getting about $4,000 out of it in the end.

Darius Ogloza · Answer

Rene, thanks for the tip.  I will look into that.  My note is about $6,500 with accrued interest.

Rene Owczarski · Answer

At this point, instead of selling it, you should think about reaching out to a debt collection law firm in the area, for them to collect on it. Because it was a pretty seemless process, when I've used a debt collection law firm to collect back rent/damages from an eviction.

You typically pay the firm a retainer amount upfront, to load it into there system and start calling on the debtor to pay up. And you typically have to give the firm a third of the gross amount they collect, but the upfront retainer usually gets credited toward the third to the firm.

But when the firm got the debtor on a payment plan, I would get my check about every month from the law firm. And the firm would deduct out their third cut, and I would get the net amount on the check.

The payment plan took a couple of years to run its course, but the debtor eventually paid in full.

Chad U. · Answer

For one thing, there is no cost out of pocket as the firm handles it internally.  Then they pursue deficiency judgments and summon borrowers to appear in court if they don't pay, generally getting a garnish or forced sale.  This is better than forking out $1K to $3K then waiting for that particular borrower to sell the asset which could be years down the road, plus depending on the state have to renew the judgment.

Chris Seveney · Answer

@Chad Urbshott

Curious why people don’t just hire an attorney to file a judgment and secure it against an asset vs paying an firm that takes a percentage

Darius Ogloza · Answer

Thanks, Chris.  Figured.  I was holding out hope for a dime.

Darius Ogloza · Answer

Thanks, Gene.  You are not THE Gene Chandler from Duke of earl fame, are you ?

Seriously, the tenants lived (and still live) in and around Monroe County NY (Rochester).  I had them sign a note that was enforceable judicially in Northern California (waiver of personal jurisdiction).  I would have no trouble pursuing them in New York State or California.

Market for Unsecured Notes?

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