Author Topic: Sell Debt Owed by Former Tenant  (Read 1968 times)

chesebert

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Sell Debt Owed by Former Tenant
« on: August 18, 2016, 01:03:51 PM »
This is the end of a tenant disaster story -- former tenant caused a bunch of damages at my property (+$10k) and has now agreed to enter into a loan agreement in order to payoff the damage over approximately 2 years.

I would not want to hold the note for that long. How and to whom do I sell the note?

The note is transferable without tenant's consent.


MsSindy

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Re: Sell Debt Owed by Former Tenant
« Reply #1 on: August 18, 2016, 01:41:45 PM »
Not sure that there is a broker site for small unsecured one-off loans.  You'd be hard press to find anyone that would take that loan.  You'd have to discount it so much - like 80%, to make it attractive.  I'm guessing the tenant has poor credit, a judgement, high temper, and the loan is unsecured.  You'd be much better off just letting him pay it over time, and you'll be lucky if you get half the payments before he defaults again.  Sorry, not a good situation, but consider yourself fortunate if you're able to collect anything on this judgement - enforcing it is the hard part.

chesebert

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Re: Sell Debt Owed by Former Tenant
« Reply #2 on: August 18, 2016, 01:48:21 PM »
I think you are right. Other option is to deduct as expenses...it will take me a year or so to fully offset rental income...

Making money in rental is definitely not easy...

Enigma

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Re: Sell Debt Owed by Former Tenant
« Reply #3 on: August 25, 2016, 01:09:12 PM »
I also have a 10k judgement for 20k of unpaid commercial rent.  The agreement is monthly payments of $200 or back to court.  I am pretty sure not many people would want to deal with the headache of assuming the loan.

NoNonsenseLandlord

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Re: Sell Debt Owed by Former Tenant
« Reply #4 on: August 25, 2016, 08:10:34 PM »
You maybe able to get .10 on the dollar for it, if you are lucky.  If the tenant has a steady job, if they do not pay, get a garnishment.

chesebert

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Re: Sell Debt Owed by Former Tenant
« Reply #5 on: August 26, 2016, 08:42:43 AM »
Do I go through local debt collection agency or local counsel to get a garnishment? I query whether it's worthwhile cost wise to pursue action vs just taking the deduct on tax and offset against gains on other properties...

NoNonsenseLandlord

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Re: Sell Debt Owed by Former Tenant
« Reply #6 on: August 26, 2016, 11:46:14 PM »
Do I go through local debt collection agency or local counsel to get a garnishment? I query whether it's worthwhile cost wise to pursue action vs just taking the deduct on tax and offset against gains on other properties...

If you are using a cash based accounting method, like 99%of landlords do, you will not have any tax deductions for unpaid debt.  You did not lose money, you lost revenue.

If you think you have a solid chance of collecting, and the tenant had had a steady job for a while, use an attorney.  The fees may be throwing good money after bad, so you want to be pretty sure you can collect.

A debt collection agency will take ~50%.  A debt collection agency will be no fees if they do not collect.

former player

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Re: Sell Debt Owed by Former Tenant
« Reply #7 on: August 27, 2016, 02:07:32 AM »
In the jurisdictions I am familiar with, in order to get wages garnished you would need to go to civil court and win your case and then get a court order for the garnish.  If your debtor does not dispute the debt, it is possible that you could do this for the cost of going along to the court and filling out the relevant forms (with the help of the court clerks if you are lucky) and paying the relevant court fees.  You may have to do it in two stages: firstly the application to have judgement for the debt and secondly the application for the garnish order.

I suppose it is just possible that the debtor would ask his employer to pay part of his wages directly to you, but he might not want his employer knowing about the debt and the employer is unlikely to want the trouble.

I suspect that the people who buy debts mostly buy debts where there is a court judgement already in place, so that they don't have the hassle and expense of getting one if the payee defaults.