This is case study in how an asset search assisted in negotiating a favorable settlement for our client.
T.J. came to us last year with a problem. A few years prior, he had lent his brother-in-law $300,000 to invest in the booming real estate business. The brother-in-law built high-end custom homes in North Carolina, but in order to take advantage of the market, the brother-in-law needed some extra capital.
It was family, so formal papers were not drawn up. No sooner had the money exchanged hands, when the real estate market collapsed. Like most other people in the construction business, things went south fast. With no market for high-end homes, business quickly dried up. T.J. kept in contact with his brother-in-law for a year; trying to come to terms on how to pay back the money. But soon, the brother-in-law stopped answering emails, calls and letters.
T.J. called us about a year ago. He wanted to figure out his best options on how to get his money back. T.J. knew that his brother-in-law had purchased several plots of vacant land, owned his own residence and also had a vacation home in either Montana or Idaho. But he didn’t know where it was, how much it was worth or how much he really owed.
After describing the story in detail, we suggested conducting an asset search to get a better sense of the brother-in-laws finances. Although he did not want to file a lawsuit against his brother-in-law, he had no choice, but he wanted to go to the table with as much ammunition as he could, to get the detail settled as soon as possible.
In addition to finding more than $200,000 in equity in his main residence, we found six large pieces of vacant land in three different counties in North Carolina worth an estimated $500,000, three residences worth an estimated $1.5 million and 2 acres of vacant land in Montana worth about $75,000. In all, about $2 million in assets with at least $1 million in equity.
Equally as important as the assets that were identified, our research did not find any indication that other people had sued the brother-in-law: no judgments or liens, and neither he nor his company had filed for bankruptcy. This was a critical piece of information that T.J. could use during the negotiations.
In depth: The Anatomy of an Asset Investigation
While they may be other creditors working behind the scenes like T.J., the fact that there were no records of any significant financial losses was an important piece of information in negotiating a settlement. Combined with the fact that there was at least $1 million in equity in the properties he owned, T.J. knew that he could push the negotiations pretty far to get most or possibly all of his money back.
In contrast, if we had found that he multiple tax liens or lawsuits, may have pushed T.J. to settle quickly for pennies on the dollar.
Armed with the details of the asset search, T.J. was able to negotiate a favorable settlement, not only getting back his original investment, but also interest covering the period that he had not paid.