Legal Question in Business Law in California

Re: default on secured promissory note

I would think your primary interest should be how to get paid, right?

Best,

Daniel

Daniel

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Re: default on secured promissory note

If it is secured then get a judgment on the security interest. Contact me directly.

Re: default on secured promissory note

Not through any legal means. Your remedy is to file suit for the balance due. If you have a perfected UCC1, you can seek to foreclosse that interest pursuant to Article 9 of the UCC or in the alternative, file suit in Superior Court for foreclosure of your interest as well as a money judgment for the balance of the note. It may be easier to reduce the deficiency to a money judgment and simply execute on that, as opposed to going the foreclosure route.

All this presumes that the written agreement between you and the buyer does not contain a mandatory binding arbitration provision. If it does, then you likely have to pursue remedies via binding arbitration as opposed to filing suit in Superior Court. Arbitration is much, much more expensive, in general, than filing suit in court.

Filing suit may get the debtor's attention and force a payment.

Re: default on secured promissory note

You'd have to ask each of the three agencies about their data-intake policies; I think you'll find that they accept negative information only from subscribers, and that to be one you have to fall into a certain class such as a credit-issuing merchant, bank, public utility, etc.

However, if your primary intent is to get paid, rather than to besmirch the debtor's credit rating, I'd suggest other tactics. Your debtor may need a good credit rating to survive and pay you. Rather than tip off the whole world, take steps to be first in line by following Mr. Guerrini's advice.

Step one is to cofirm that you have a perfected security interest, e.g. by checking with the Secretary of State's office to be sure you have a current UCC-1 properly filed so that it comes up when searched for under the debtor's name, and that it shows all types of property subject to your security interest.

Next, you should take reasonably-possible steps to monitor the amount, location, use and condition of the collateral.

There is a limited amount of self-help allowed under the Section 9 of the Uniform Commercial Code (UCC) and secured creditors have some rights to repossess and sell collateral, but if you are a novice at this, you need to consider hiring a lawyer to advise or assist.

As to resorting to lawsuit and trying to convert your security interest as a noteholder into a judgment, the wisdom of this depends upon a number of factors including the amount at stake, convenience factors, the quality of the collateral vs. the debtor's other assets and liabilities, the certainty of your security interest, and a host of other objective and subjective considerations.