Do you have a commercial collection claim against a debtor? Knowing the debtor’s asset picture is important. Board Certified Creditors’ Rights and Business Bankruptcy attorney, Robert S. Bernstein, discusses asset investigation in this 5 Minute Legal Master video.
Asset Investigation (5:05)
Welcome to the 5 Minute Legal Master series where expert attorneys help you master important legal topics. Today, board certified creditors’ rights and business bankruptcy attorney, Robert S. Bernstein discusses asset investigation.
I am going to talk about asset investigations in the context of a commercial collection or other recovery matter where knowing the debtor’s asset picture is important to the decision making process. There are 3 categories of sources of asset information that I want to talk about, 1 is obvious, 1 is not so obvious and 1 is questionable. Under the obvious category we have things like real estate workers. If your debtor owns real estate in the area, you should be able to find that by looking at the real estate records, searching it by name or address, there are ways to either physically or electronically go to those records and find it. Similarly with vehicles, each state has a registration and titling process for vehicles and if they are titles vehicles you should be able to find that out from the state records. There are services that you can hire to do this in the state capitals. Some states have it electronically searchable.
Another obvious is if you adversary, your debtor is a business, go look at the business or have someone drive by. Is there an open business that has inventory, equipment or other assets of substance that you can see? Of course that is helpful because if you drive by the business and it is closed and empty, that tell you something about your likelihood of recovery too. The not so obvious areas, uniform commercial code filings, you probably know that the uniform commercial code is a method of registering liens on personal property, personal property as distinguished from real property.
If there is a lien registered against a tractor in your debtor’s name, the chances are your debtor has a tractor, it may be liened to someone and might not have any equity, but there still is some value in knowing that there is a tractor that your debtor uses for some part of its business. So looking at UCC filings, another is looking at other lawsuits filed against your debtor. You may think, well if there are other suits that means it is going to be more difficult to collect. It may be, but also it will tell you something about who thinks your debtor owes them money and it may tell you about the basis for that money. Perhaps your debtor bought things, inventory, equipment, furniture, fixtures, any of those things, that would give you an idea that your debtor might have those things, so that is a clue.
The third point in not obvious is just logic, what kind of business is your debtor in? What kind of equipment or assets would your debtor be likely to have if it is in that business? Let us say it is as simple as a plumber, if your debtor is a plumber the chances are your debtor has some plumbing tools and maybe has a truck. If your debtor is a commercial plumber may have a compressor, trailer, may have some other piece of equipment that is logical to be part of the business tools of the kind of debtor.
The questionable category are things like bank account locating. Someone once said about the way laws are made you do not want to know what goes into them. Some of these things you might want to know what goes into this agency finding this asset, lie locating bank accounts. I am not sure how that works and I am not sure whether there is an liability for using a service like that, but just be careful about that. Another is talking to neighbors, if you have a consumer collection matter the fair debt collection practices act or other debt collection acts may cover that and you may not be able to talk to third parties about locating information or asset information.
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