When you lend money or capital to an individual or organization, there
is always a chance that you may not get your money back through either
defaulting on payments or fraud. This can cause you to lose varying amounts
of money, requiring you to employ different collection efforts in order
to attempt to recoup your losses. There are several ways that you can
prevent this from happening.
Perform a Proper Investigation Before Lending
When lenders fail to do their homework, bad things can happen. Possibly
the most obvious way to prevent against being defrauded is to do a thorough
credit investigation and background check on any potential debtor before
choosing to do business with them. If they have a shady credit history
or evidence of suspicious activity, it is probably not a good idea to
lend them money.
Watch out for the following signs:
- Several maxed-out lines of credit
- Multiple business entities registered under the same principal
- Pending lawsuits against the prospective client
A history of previous
Know Your Collateral
In the case of secured loans, it is important that you know and maintain
leverage on your collateral once you have chosen to move forward with
a particular client. Secured loans are backed by some sort of large asset,
such as a person’s home, which a creditor would be entitled to claim
should the debtor fail to repay the money they owe. Not only is keeping
track of your collateral necessary, but making sure that it is enforced
can deter debtors from possible default.
Diversify Your Lending Portfolio
As the old adage says, “don’t put all your eggs in one basket.”
Lending massive amounts of capital to very few debtors increases your
risk, putting you in an extremely tight situation in the event of a default.
When you bet big, one bad deal can put you in financial straits. For this
reason, it is highly advisable that you lend to several reliable clients
in smaller amounts. A default on a smaller-sized loan, while still undesirable,
would have a much smaller effect on your overall financial situation.
Contact a Fort Worth Consumer Collections Attorney
If you are having trouble collecting the payment from a debtor, contact
an experienced Fort Worth
consumer collections attorney from the Pritchard Law Firm today! We have served as legal counsel
for both debtors and creditors, giving us invaluable insight that can
be used to improve your chances of recovering your deserved compensation.
With more than 45 years of combined experience, your case is sure to be
in good hands.
Call (817) 285-8017 or request a free case evaluation
today to discuss your situation with one of our dedicated attorneys.