What Do You Do When a Borrower Goes Silent?

[Deborah Wodell]

Hey everyone,

I wanted to get some perspective on a situation a friend of mine is dealing with. They’ve done a couple of private money lending deals, had agreements and promissory notes in place, and everything looked solid upfront. But now the two borrowers they funded have completely stopped responding.

What would you do in this situation? Has anyone here had to deal with borrowers going dark even with paperwork in place? Did you pursue legal action, work with a collection agency, or find another route that helped recover the funds? Put liens on the properties? 

Curious to hear how others have handled this. Thanks in advance for any insight you can share.

[Clayton Silva]

They did not put a lien against the homes?  Whew, not an attorney here, but my guess is they are going to have a difficult time getting any of that back. 

I would immediately call a real estate attorney and have them review the note and agreements and give guidance/course of action.  I also never recommend promissory notes ever except to trusted friends and family with a lot of cash.