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In another thread, I mentioned that we finally collected on a deadbeat borrower. Here’s that story.
In 2005, this borrower took out a loan of about $21,000 for debt consolidation, to combine the two loans he already had with the bank and lower the payments. We kept the collateral from both loans: his mobile home and the land it’s attached to, and 4 vehicles and a boat, motor, and trailer. Looking back in the file, I see this was a credit workout, meaning that even then, the bank knew he was a bad credit risk.
Even more of a risk than I knew. This deadbeat borrower was also a deadbeat dad. The notes in the file say he quit his job because his child support was too high. At the time of this debt consolidation, he was working odd jobs, mostly for relatives, in order to avoid paying child support. He was also in the middle of a divorce. Which apparently took 2 years to complete, since the notes from 2007 say his divorce was still in process.
I wasn’t a lender back then. The loan officer was a now-retired coworker. The loan fell in my lap because I was the only lender at our branch for more than a year, and during that time, management threw lots of stuff at me that I would never have done if I’d had a choice.
It took the deadbeat over 15 years to finally pay off the loan, and we had to go to small claims court to collect the last $3,000.
Per notes from 2010, His divorce was finalized in 2007. His child support payments took most of his income, but at least he was working a steady job.
BTW, those vehicles were old even when the loan was originally taken out - 2 from the 1980s, 2 from the 1990s, and a boat from the 1990s. The mobile home was crap, built in the late 1970s and added on to, and he didn’t have insurance on it. We had to force-place insurance right out of the gate.
This was a balloon loan, so we rewrote it once every 5 years. More often if the payments or property taxes were getting behind again. With the latest rewrite, we convinced him to escrow for property taxes and insurance, so we would know those were paid, at least.
About that time, he told me that his youngest child was about to turn 18, so he wouldn’t have to pay child support any longer. He’d have more money available to pay his loan. Great! I thought. But unsurprisingly, it didn’t help.
Even after the rewrite, this borrower was constantly past due. It didn’t help that he spent a stint in jail for meth possession. During that time, his buddy who was staying at the mobile home made a few payments, as did the deadbeat’s parents. I think the payments were on time more often when the borrower was in jail than when he wasn’t.
After he got out of jail, he went to work for a local fabrication company. He made good money. But he still wouldn’t/couldn’t pay. With about $3,000 left on the loan and no payments for 90+ days, we decided to take him to small claims court. The vehicles weren’t worth anything. The mobile home would probably cost more to clean up than the $3,000 he owed on it. Small claims seemed like the best option for the bank.
First, we dealt with the county courthouse. Filed the claim. Most everything could be done electronically, so that made things easier. Next, serve the defendant.
We had the option to send it by certified mail, but Ted decided we needed to get it to the borrower faster, since small claims takes a really long time in Minnesota. So we paid the local police to deliver the notice. $75 well spent. The officers took the notice to the mobile home, and while they were there found two people with outstanding warrants for drug charges. There was a bit of a scuffle, apparently. The officer who dropped off the form with us saying he’d delivered the notice came back with bloody knuckles. Smeared a little blood on the form, even. But we got the notice served.
The officer said that the borrower told him he could bring some money to the bank to pay off the loan, which we would have welcomed. Surprising no one, he never delivered.
Because the deadbeat never responded, I didn’t even have to go to court on behalf of the bank. The judge just found in our favor. Then I had to file the judgment (which I think shows up on his credit report) and get what they call a Writ of Execution, which would let us levy the borrower’s wages.
Then I had to send the Writ of Execution to the Sheriff’s office, who served it to the deadbeat’s employer. This whole thing would never have worked if the deadbeat wasn’t working, or if we didn’t know who his employer was. Then we waited 70 days. The employer collected money from the deadbeat’s paycheck during those 70 days. There’s a whole calculation on the forms for how much they had to collect and what sorts of income are exempt. Then the employer sent those funds to the sheriff, who forwarded it on to us after skimming 15% off the top for their fee.
Add in the time to mail back and forth, and 70 was closer to 90 days. Then we only got a portion of what the deadbeat owed us. So we asked the sheriff to serve the employer again. When the second round was done, we were closer to getting what we were owed, but not complete.
It turns out the Writ is only good for 150 days, so by the time we got the second check from the sheriff’s office, the Writ was expired. We had to go back to the court, pay another fee, and get another Writ of Execution. Which we sent to the sheriff for round 3. Another 90ish days, and we finally collect enough funds to pay off the deadbeat’s debt! Yay! Drinks all around!
We weren’t quite done with paperwork yet, though. We had to send the original Writ of Execution back to the court, with a cover letter saying it was satisfied.
The whole process, from the time he made his last payment until we received the last check from the sheriff’s office was almost two years. Some parts around the middle took longer than expected because of the courts being shut down due to COVID-19. Each step of the process required more fees, only a few of which we could add on to the amount the borrower owed. All together, it cost us about $600 to collect about $3,000.
All during the last part of this process, Ted and the other upper management folks kept bugging me about why everything was taking so long. According to them, in Cheeslandia it only takes a short time to get a judgment and levy wages. They don’t have to serve notice to the borrower or give them time to respond. I had to explain to them multiple times that our state handles things differently. It’s great for the customer, not so much for the bank.
In 2005, this borrower took out a loan of about $21,000 for debt consolidation, to combine the two loans he already had with the bank and lower the payments. We kept the collateral from both loans: his mobile home and the land it’s attached to, and 4 vehicles and a boat, motor, and trailer. Looking back in the file, I see this was a credit workout, meaning that even then, the bank knew he was a bad credit risk.
Even more of a risk than I knew. This deadbeat borrower was also a deadbeat dad. The notes in the file say he quit his job because his child support was too high. At the time of this debt consolidation, he was working odd jobs, mostly for relatives, in order to avoid paying child support. He was also in the middle of a divorce. Which apparently took 2 years to complete, since the notes from 2007 say his divorce was still in process.
I wasn’t a lender back then. The loan officer was a now-retired coworker. The loan fell in my lap because I was the only lender at our branch for more than a year, and during that time, management threw lots of stuff at me that I would never have done if I’d had a choice.
It took the deadbeat over 15 years to finally pay off the loan, and we had to go to small claims court to collect the last $3,000.
Per notes from 2010, His divorce was finalized in 2007. His child support payments took most of his income, but at least he was working a steady job.
BTW, those vehicles were old even when the loan was originally taken out - 2 from the 1980s, 2 from the 1990s, and a boat from the 1990s. The mobile home was crap, built in the late 1970s and added on to, and he didn’t have insurance on it. We had to force-place insurance right out of the gate.
This was a balloon loan, so we rewrote it once every 5 years. More often if the payments or property taxes were getting behind again. With the latest rewrite, we convinced him to escrow for property taxes and insurance, so we would know those were paid, at least.
About that time, he told me that his youngest child was about to turn 18, so he wouldn’t have to pay child support any longer. He’d have more money available to pay his loan. Great! I thought. But unsurprisingly, it didn’t help.
Even after the rewrite, this borrower was constantly past due. It didn’t help that he spent a stint in jail for meth possession. During that time, his buddy who was staying at the mobile home made a few payments, as did the deadbeat’s parents. I think the payments were on time more often when the borrower was in jail than when he wasn’t.
After he got out of jail, he went to work for a local fabrication company. He made good money. But he still wouldn’t/couldn’t pay. With about $3,000 left on the loan and no payments for 90+ days, we decided to take him to small claims court. The vehicles weren’t worth anything. The mobile home would probably cost more to clean up than the $3,000 he owed on it. Small claims seemed like the best option for the bank.
First, we dealt with the county courthouse. Filed the claim. Most everything could be done electronically, so that made things easier. Next, serve the defendant.
We had the option to send it by certified mail, but Ted decided we needed to get it to the borrower faster, since small claims takes a really long time in Minnesota. So we paid the local police to deliver the notice. $75 well spent. The officers took the notice to the mobile home, and while they were there found two people with outstanding warrants for drug charges. There was a bit of a scuffle, apparently. The officer who dropped off the form with us saying he’d delivered the notice came back with bloody knuckles. Smeared a little blood on the form, even. But we got the notice served.
The officer said that the borrower told him he could bring some money to the bank to pay off the loan, which we would have welcomed. Surprising no one, he never delivered.
Because the deadbeat never responded, I didn’t even have to go to court on behalf of the bank. The judge just found in our favor. Then I had to file the judgment (which I think shows up on his credit report) and get what they call a Writ of Execution, which would let us levy the borrower’s wages.
Then I had to send the Writ of Execution to the Sheriff’s office, who served it to the deadbeat’s employer. This whole thing would never have worked if the deadbeat wasn’t working, or if we didn’t know who his employer was. Then we waited 70 days. The employer collected money from the deadbeat’s paycheck during those 70 days. There’s a whole calculation on the forms for how much they had to collect and what sorts of income are exempt. Then the employer sent those funds to the sheriff, who forwarded it on to us after skimming 15% off the top for their fee.
Add in the time to mail back and forth, and 70 was closer to 90 days. Then we only got a portion of what the deadbeat owed us. So we asked the sheriff to serve the employer again. When the second round was done, we were closer to getting what we were owed, but not complete.
It turns out the Writ is only good for 150 days, so by the time we got the second check from the sheriff’s office, the Writ was expired. We had to go back to the court, pay another fee, and get another Writ of Execution. Which we sent to the sheriff for round 3. Another 90ish days, and we finally collect enough funds to pay off the deadbeat’s debt! Yay! Drinks all around!
We weren’t quite done with paperwork yet, though. We had to send the original Writ of Execution back to the court, with a cover letter saying it was satisfied.
The whole process, from the time he made his last payment until we received the last check from the sheriff’s office was almost two years. Some parts around the middle took longer than expected because of the courts being shut down due to COVID-19. Each step of the process required more fees, only a few of which we could add on to the amount the borrower owed. All together, it cost us about $600 to collect about $3,000.
All during the last part of this process, Ted and the other upper management folks kept bugging me about why everything was taking so long. According to them, in Cheeslandia it only takes a short time to get a judgment and levy wages. They don’t have to serve notice to the borrower or give them time to respond. I had to explain to them multiple times that our state handles things differently. It’s great for the customer, not so much for the bank.
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