Foreclosure: Trustees in Foreclosure

     Trustee under a deed of trust are agents for both the lender and the borrowers. Accordingly, a trustee must act fairly and impartially. The lender must not let either the lender or the borrower influence the manner in which a trustee carries out the terms of the deed of trust, especially if this would be detrimental to either party. If any question arises as to the existence of the default or the amount in default, a trustee should seek the aid and direction of the court. The powers and duties of a trustee are governed by the deed of trust and Virginia Code Section 55-59.1 et seq. The code provides when the deed of trust does not. A trustee has no right to exercise the power of sale or to obtain possession until such time as the borrower defaults under the note or deed of trust, and, then, only for the purpose of selling the property at foreclosure or preserving the property until sale. When a default occurs, there is no change in title – the property merely becomes eligible to be sold under the powers originally conferred to the trustee by the owner. Thus, the noteholder has the right to have the property sold and the proceeds of the sale applied to the debt.

Real Estate: Perfecting Mechanic's Liens

     In recent blogs we have been discussing the benefits of using real estate to improve creditors’ positions. In a previous blog we began a discussion of the benefits of using mechanic’s liens to aid in the collection of your debt.

     Virginia Code §§43-4, 43-7 and 43-9 provide for the perfection of the lien by general contractors, subcontractors, laborers and suppliers. In each section the creditor must file a memorandum of lien at any time after the work is commenced or material furnished, but not later than 90 days from the last day of the month in which he last performs labor or furnishes material, and in no event later than 90 days from the time such building, structure, etc., is completed, or the work thereon otherwise terminated. The memorandum must contain specific information as set forth in the code (and there are forms in the code), and must be filed in the clerk's office in the county or city in which the building, structure etc., or any part thereof is located. The memorandum shall show the names of the owner of the property sought to be charged, and of the claimant of the lien, the amount and consideration of his claim, and the time or times when the same is or will be due and payable, verified by the oath of the claimant, or his agent, including a statement declaring his intention to claim the benefit of the lien, and giving a brief description of the property on which he claims a lien.
     In a future blog we will explore suits to enforce the lien.
    We have experienced attorneys and staff who can examine title, file mechanic’s liens, and litigate to enforce the same.

Bankruptcy: Recorded Judgment Honored

     The Virginia Supreme Court held in Leasing Service Corp. v. Justice that a judgment creditor, who recorded its judgment prior to the debtor filing its bankruptcy petition, would not be prevented from a post-discharge enforcement of its lien upon the debtor's real property interests in jurisdictions that were acquired before the commencement of the bankruptcy proceedings. Specifically, the Court ruled that the lien was not paid off or discharged in the bankruptcy proceedings, and could not be ordered released pursuant to Virginia Code §8.01-455. Therefore, the judgment continued to be a lien on any interest that debtor may have had in land located within that county, despite his bankruptcy discharge from personal liability in the payment of the judgment.
     The lesson of Justice is that you should always promptly docket your judgments where you believe that the debtor owns or may own property.

 

Collections: Collection Accounts - What We Can Do For You

     We can assist you by handling all seriously delinquent accounts from start to finish - no other collection alternative that you have can do this.
     I also want to thank all of you who are clients. You helped make this year our most successful ever. I look forward to an ever better 2017.
     For those of you who are not yet clients, please know that I am always ready and willing to meet with you. At Lafayette, Ayers & Whitlock, PLC, we have a diverse general practice of law. We focus on Creditor’s Rights. We are unique amongst Creditor’s Rights law firms as we represent you in all areas: collections, bankruptcy, foreclosure and real estate.
     In collection matters, we can assist you by handling all seriously delinquent accounts from start to finish - no other collection alternative that you have can do this.
     If you hire an additional staff employee, you are paying salary and benefits for collections. This amount is non-recoverable from your debtors, even though they caused the expenditure. Further, since the employee is not an attorney, they cannot try contested cases, or file Motions for Judgment in Circuit Court, or conduct debtor's interrogatories (without interrogatories many collection cases will sit inactive).
     If you employ a collection agency, you may incur a flat fee cost for accounts. This cost is not recoverable under Virginia law, despite the fact that your loan documents say that the debtor will pay all costs of collection. In addition to these nonrecoverable costs, you will also have percentage costs that you cannot recover. A collection agency is frequently your worst option because they can do less for you than you can do for yourself. In reviewing the Collection Alternatives Comparison Charts, you will see that if a debtor does not respond to the collection agency's letters, the agency is sunk. The agency cannot file any court papers on your behalf, and they cannot perform any judgment executions. In the end, all a collection agency does is provide a threatening third party voice.

Chart One: Action

ACTION	COLLECTION AGENCY	ADDITIONAL EMPLOYEE	LAW, PLC
Make Demand	Yes	Yes	Yes
Collect Payments	Yes	Yes	Yes
Take Judgment	No	Yes	Yes
Try Contested Cases	No	No	Yes
File Garnishment	No	Yes	Yes
Levy	No	Yes	Yes
Summons to Answer Interrogatories	No	No	Yes

Chart Two: Costs

ACTION	COLLECTION AGENCY	ADDITIONAL EMPLOYEE	LAW, PLC
Costs	Unrecoverable fee paid to agency, if they collect, and non-assessable to the     debtor	All collection costs are out of your pocket and non-assessable to the debtor	1/3rd fee of all amounts collected- 25% recoverable from debtor upon court judgment  unless your loan documents say 1/3rd - you only pay fees on what we collect

     If you choose Lafayette, Ayers & Whitlock, PLC, we can handle your accounts from beginning to end. We can accept all cases on a one-third contingency fee of all amounts collected. We will assess the court-allowed fee the moment the account is turned over for collection, and this amount is recoverable from the debtor. We have trained and experienced support staff and an aggressive approach to collections. In reviewing the Course of Action Chart (below) you will see that we will aggressively pursue your recovery. Virginia District Court judgments are good for ten years, twenty in the Circuit Court. If the judgment is docketed (we docket all judgments unless the value is very small or you instruct otherwise), the lien is enforceable for twenty years. We provide detailed monthly accounting. At the beginning of each month you will receive a report outlining significant matters, a computer generated financial accounting, by debtor, dollar for dollar. You will also receive a case status report detailing current status and action.

COURSE OF ACTION CHART

Step 1 --- Account turned over for collection.
Step 2 --- Demand letter sent to debtor within 24 hours of our receipt of the account.
Step 3 --- After ten days (a time period that we are required by federal law to give), if there is no plan for payment that you approve, we will file suit. The suit is normally set 30-45 days in advance.
Step 4 --- On the date of the suit return we will either obtain default judgment or, if the debt is contested, set the case for trial.
Step 5 --- Once judgment is entered, and after the ten-day appeal period, we will docket the judgment and proceed in post-judgment collections, as set forth below.
Step 6A --- Establish an acceptable post-judgment payment plan; if not,
Step 6B --- Garnishment of wages or accounts; if not,
Step 6C --- Levy on personal property; if not,
Step 6D --- If no apparent remedy, schedule debtor's interrogatories and return to Step 6A.
Step 7 --- If there are no apparent collection measures available, we will review a new credit report every six months and return to Step 6A.

     In bankruptcy matters, we can assist you by handling all of your needs. We can review bankruptcy schedules, review and object to chapter 13 plans, file proofs of claim, attend hearings and more.
     In foreclosure matters, we can assist you by handling all of your foreclosure cases from demand to final accounting in all counties and cities across the Commonwealth.
     In real estate matters, we can assist you by preparing loan documents for first, second, equity line and refinances, as well as conducting closings, recordings and coordinating title examination and title insurance.
     Please call me at 545-6251 for a free consultation.