Well, I guess she's not the worst, because if she was just a little bit worse, we would have foreclosed on her loan. But she has been the most expensive, in the terms of postage and employee time.
I'm not the loan officer, but since I send out past due letters and so forth, I deal with this customer frequently. We'll call her "Betty."
Betty bought a restaurant about 10 years ago. She took out a loan at our bank to pay for the building and renamed the restaurant after herself. According to my coworkers, Betty's is always busy when they go there to eat. I refuse to eat there, and I'll get to the reason in a bit.
About 6 years ago, Betty filed a Chapter 11 bankruptcy. That's a reorganization - her debts are not wiped clean, but she gets a much longer time to pay them back. Since one things she owed on was taxes (not only didn't she pay her income taxes, but she failed to send in the money that she withheld from her employees' paychecks for taxes), the IRS stepped in and set up a payment plan for her.
Betty also has a checking account with us. It used to be several, but seeing how they were all constantly overdrawn and there didn't seem to be any rhyme or reason to which account she used for what, we closed the extra accounts "to simplify things for her." The IRS had informed us that if we paid the employees' paychecks when the account was overdrawn, we could be liable for paying the employees' tax withholding. So now Betty's employees are frequently pissed at US when we say we can't cash their checks.
Since her loan is still constantly past due, we frequently take a payment out of her checking account when there's money available. That doesn't happen very often, and even then, she's usually still a month behind. Almost all of her payments go to interest because they're so late, so the balance of her loan doesn't drop. She started at $36,000 ten years ago, and her balance is about $32,000 now.
The loan has been rewritten and extended at least 3 times. The last time it was extended, we also increased the amount of the loan to pay her real estate taxes, since she was close to having the county take her property because of past due real estate taxes. Each time the loan has been extended, the interest rate has been lowered and so have her payments. The bank has done everything possible to help her keep her restaurant.
Then, a few months ago, we received a notice from her insurance company that her property/liability insurance was being canceled due to non-payment. I had to advance on her loan to pay for force-placed insurance, which only covers the property - it doesn't provide liability insurance. So if a customer were to get sick or fall and break their leg on the restuarant property, she would have no coverage to pay for a lawsuit. (This, BTW, is why I refuse to eat at her restaurant any more.) I sent her a letter explaining all this, but I don't think she even reads mail from the bank any more.
She thinks she has figured out how to work the system, and after a fashion, she has. But she's pissing everybody off in the process. The truck driver who delivers her food to the restaurant stops at the restaurant, picks up her check, comes to the bank to cash it, and then goes back to the restaurant to unload the food. Half the time there's no funds in the account, so he has to come back the next day and try again. She only has two or three employees that have been working there more than a few months - most of them find a different job after we refuse to cash their paychecks.
The bank is getting shorter with her. But if we want to foreclose, we have to go to the bankruptcy court and get their permission to foreclose, which means more headaches and legal fees. For now, we take payments from her checking account as we can and continue to send her past due letters.
The worst part of it is that she also has a loan with us for her house. That loan is never past due, and the real estate taxes are always paid on it. How is she able to pay her house loan, but not her business loan? Some customers are just beyond comprehension.
I'm not the loan officer, but since I send out past due letters and so forth, I deal with this customer frequently. We'll call her "Betty."
Betty bought a restaurant about 10 years ago. She took out a loan at our bank to pay for the building and renamed the restaurant after herself. According to my coworkers, Betty's is always busy when they go there to eat. I refuse to eat there, and I'll get to the reason in a bit.
About 6 years ago, Betty filed a Chapter 11 bankruptcy. That's a reorganization - her debts are not wiped clean, but she gets a much longer time to pay them back. Since one things she owed on was taxes (not only didn't she pay her income taxes, but she failed to send in the money that she withheld from her employees' paychecks for taxes), the IRS stepped in and set up a payment plan for her.
Betty also has a checking account with us. It used to be several, but seeing how they were all constantly overdrawn and there didn't seem to be any rhyme or reason to which account she used for what, we closed the extra accounts "to simplify things for her." The IRS had informed us that if we paid the employees' paychecks when the account was overdrawn, we could be liable for paying the employees' tax withholding. So now Betty's employees are frequently pissed at US when we say we can't cash their checks.
Since her loan is still constantly past due, we frequently take a payment out of her checking account when there's money available. That doesn't happen very often, and even then, she's usually still a month behind. Almost all of her payments go to interest because they're so late, so the balance of her loan doesn't drop. She started at $36,000 ten years ago, and her balance is about $32,000 now.
The loan has been rewritten and extended at least 3 times. The last time it was extended, we also increased the amount of the loan to pay her real estate taxes, since she was close to having the county take her property because of past due real estate taxes. Each time the loan has been extended, the interest rate has been lowered and so have her payments. The bank has done everything possible to help her keep her restaurant.
Then, a few months ago, we received a notice from her insurance company that her property/liability insurance was being canceled due to non-payment. I had to advance on her loan to pay for force-placed insurance, which only covers the property - it doesn't provide liability insurance. So if a customer were to get sick or fall and break their leg on the restuarant property, she would have no coverage to pay for a lawsuit. (This, BTW, is why I refuse to eat at her restaurant any more.) I sent her a letter explaining all this, but I don't think she even reads mail from the bank any more.
She thinks she has figured out how to work the system, and after a fashion, she has. But she's pissing everybody off in the process. The truck driver who delivers her food to the restaurant stops at the restaurant, picks up her check, comes to the bank to cash it, and then goes back to the restaurant to unload the food. Half the time there's no funds in the account, so he has to come back the next day and try again. She only has two or three employees that have been working there more than a few months - most of them find a different job after we refuse to cash their paychecks.
The bank is getting shorter with her. But if we want to foreclose, we have to go to the bankruptcy court and get their permission to foreclose, which means more headaches and legal fees. For now, we take payments from her checking account as we can and continue to send her past due letters.
The worst part of it is that she also has a loan with us for her house. That loan is never past due, and the real estate taxes are always paid on it. How is she able to pay her house loan, but not her business loan? Some customers are just beyond comprehension.
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