Hard Money 101: Everything You Need to Know Before Applying for a Loan

Money can be a fickle thing. There’s a lot to know about it and it seems that there is constantly another aspect of it to learn, especially with a bridge loan or hard money loan. Often these are associated with real estate, and you don’t want to be ignorant on the subject. If you are getting ready to apply for a hard money loan, you’ll want to know about debt recovery before you sign any paperwork.

What is debt recovery?

You most likely have heard of debt, but perhaps not debt recovery. This is when a loan goes unpaid continuously and the creditor turns to a collection service to regain the money owed to them. This is a step beyond debt collection, which is when the original lender is still trying to recover the money.

There are a few important things to note if your account has been turned over to debt recovery. The first being there are now records of your inability to pay your loan on time and are currently delinquent. These negative marks are sent to credit bureaus which will in turn have negative consequences on your credit score. At this point in the debt collection process, you’ve moved beyond debt collection and are now working with a third-party collector.

What do I do about debt collectors?

This is when the phone calls and letters start. These are to arrange payment. The process can end here if the borrower (you) are able to come to an agreement to return the loaned money. If you cannot pay or don’t respond, the collector will then update you that they are seeking legal advice from an attorney. Here, the attorney could recommend legal action and the collector may file suit against you. They could also decide against filing a lawsuit and instead try to collector other ways before eventually closing your debt collection file.

If the former happens and the collector does file suit, you will be served a summons to court once a trial date is set. At this point, if you’ve been thinking this will all blow over, you need to start paying attention. If you continue to disregard what is happening, default judgment against you will be awarded to the collector. Now, the attorney can file a Writ of Attachment, try to find your assets, and begin the process of satisfying judgment in terms of liens, garnishments, and bank levies.

To simplify, they will get the money that is owed to them without any influence from you during the litigation.

When should I hire an attorney?

The are several reasons to seek legal advice if this happens. Larger institutions like the Global Legal Law Firm have access to resources that can be specific to your situation. They also will know more about the outcomes, legal jargon, and way to organize your defense. Most importantly, they will have a grasp on the Fair Debt Collection Practices Act (FDCPA). This act outlines many of the protections and rights you have when dealing with a collector. You will need to pay attorney fees, but you will save yourself lots of money in the long run by getting sound legal advice from experts.

When should I consider a hard money loan?

Now that you have a better understanding of what debt recovery is, you can have a serious conversation about getting a hard money loan. There are a variety of reasons to get hard money. You might be looking at bridge loans Oregon. Perhaps you are a “fix and flip” contractor wanting to try the luck on a more expensive project. Some careful consideration on your part needs to take place so you don’t find yourself facing debt recovery. If you can make regular monthly payments on your investment property, a hard money loan may be worth it.

Make sure you can handle the interest rate of any short-term loan you take on. With any hard money lender, you want to know the principal of the loan as well as the terms of the contract. By understanding what’s at stake as well as the parameters of any loan, you are well on your way to finishing your first class in hard money 101.