The earlier a debt is recognized as a problem debt, the better the prospects of working the problem out. Problem loans can be identified by such characteristics as inability to obtain current financial information from the debtor, increase of debtor¡¯s debt from other lenders, declining sales and the like. In enforcing a secured interest, the creditor should take great care to follow jurisdiction. Without such care, the debtors or third parties may have claims against the creditor resulting in damages far greater than the amount of debt the creditor is attempting to statutory liabilities. In addition, without taking the appropriate steps, the creditor may be denied the right to collect a sufficient judgment. Especially these actions need the lawyer¡¯s assistance. .

a. Work Out Agreements with Other

Most debtors will have a number of creditors and frequently a default in one credit will be accompanied by defaults in others. This means that if litigation is to be avoided, all creditors must agree on a settlement with the debtor. In such cases, the creditor should consider employing? the services of a third party? such as? an accountant, lawyer, or the problem of conflict of interest and ensure objectivity in resolving the debtor¡¯s problem.

b. Demand letter

A demand letter is often used as a legal requirement for accelerating full payment of debt or for a preparatory step toward a subsequent legal action. A demand letter also functions as pressure upon the debtor for an early settlement. It often provides clues to the creditor¡¯s decision to sue.

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