by Shawn P. McClure, Esq.

While I subscribe to the belief that a secured lien holder should always know the location of its collateral, I understand that is essentially impossible to practice. Which is why a secured lien holder may some day find themselves in a position where they find their collateral in the possession of a third party. Often that third party is a garage looking to be paid for repairs, towing or storage with respect to the collateral.

Under Pennsylvania law, the secured lien holder is generally on the hook for repairs and towing charges. The theory being that the secured lien holder receives any benefit bestowed upon the collateral. However, a dispute often arises over storage fees. Particularly, where a garage stores the collateral and then makes no effort to inform the secured lien holder of the collateral’s location.

With typical charges of $25.00-$35.00 per day, these storage fees can quickly accumulate. A garage is entitled to any storage fees incurred after the secured lien holder gave “consent” to storing the collateral. Obviously, if the secured lien holder gave express consent to store the collateral, there is no issue. The problem arises in instances of implied consent. Implied consent will be found when the garage has sent notice to the secured lien holder that they have the collateral and the secured lien holder does not pick up the collateral.

However, most problems arise when express consent is not given and notice is not sent. The secured lien holder after months of contacting the Debtor about delinquent payments finally hears from the Debtor that the collateral has been at the local garage for months. So what does a secured lien holder do?

1. Immediately contact the garage and find out exactly what amount of money they are demanding. Obtain a break down of the charges identifying what is for repairs, towing, storage, etc. Also, find out what they are charging per day to store the collateral.

2. Immediately make a reasonable offer, in writing, to the garage to resolve the matter. Pennsylvania case law provides that if a garage declines a reasonable offer to a secured lien holder, then the garage cannot seek any storage fees if it is later found consent to storage did not exist.

3. It is usually best to settle. However, if the garage is unreasonable, then immediate legal action should be taken by contacting your creditors’ rights attorney.

It’s gotten pretty quiet out there about whether businesses can get loans; what was known as the “credit crisis.”  It hasn’t loosened up very much. Maybe there is money to lend.  Maybe there isn’t.  Even if there is, it seems that only those busineses with good credit, good assets and a good business plan will qualify.  These are the best risks.

But there is still another credit crisis out there.  That is the crisis that small- and medium-sized businesses are facing daily.  The question of whether to extend credit to its customers is a daily issue.  Can we afford to use up our limited credit line on extending credit to new customers?  What if we need it for materials or staff?  Or advertising?  Are there was to reduce our risks to enable us to get the business without losing our shirts?  These are questions that are asked more and more frequently as this recession continues.

Credit managers and other treasury people need to worry about these issues and make decisions based on proper policy, proper risk analysis and proper documentation (when they do lend).

Business owners and managers:  make sure you are thinking about this stuff other than when the need is immediate.

Bob Bernstein

…That’s hard to do when it seems like we have no control over the loss of a large percentage of our personal net worth.  Real estate values down, stock market values down.  Twenty-five percent (or more) of some peoples’ assets gone in a couple of months.

So, hard do you stay calm?  Well, as an individual, you take the long view and recognize that the markets always come back (unless you think this is really the end of civilization as we know it!).  In that case, you plan for when they start coming back (perhaps in a year or two).  If you are unlucky enough to need your invested money in the next couple of years, you have a problem.  I feel for people expecting to retire in a couple of years.  If they still had all their money in the market, perhaps they were not getting (or taking) good advice.

As a business owner or manager, you have to consider your market and customers and how the recession will affect them.  You should adjust accordingly.  If you have a business that will grow during this time, plan to take advantage of the market.  If your industry will suffer, then plan to take advantage of the opportunities to attract good employees from others in the industry, give good value nd god service and attract markt share.  If possible, use your cash wisely to be prepared for the upturn.  My father taught me a system for use that the craps table that had me conserve my cash so I could be around when the “good roll” came.  If you are too risky and plunge into things, then you may not be at the table when the good roll comes.

I follow that advice regularly.

Bob