Collections - Posted by Mark Mitchell

import · December 17, 2002, 4:17am

Posted by Shawn J. Dostie on December 20, 2002 at 06:48:26:

regulated. Oh, and for the most part, just like attornies, we are an honest and upstanding group of professionals.

Thanks,
Shawn(OH)

import · December 17, 2002, 4:17am

Collections - Posted by Mark Mitchell

Posted by Mark Mitchell on December 17, 2002 at 05:17:27:

Hi all,

I was thinking about pursueing the collection of mortgage liens on foreclosures and was wondering if you need a license in MD to form a collections agency?? I plan on being assigned to judgement in case your wondering. Also, if a house goes to auction for 60,000 and the only mortgage is 50,000; while my lien is 8,000 who do I get paid from and how can I hide it from the IRS?? Lastly, if I was to collect that money on a contigency basis of 30%, which would be 2,400, who would pay me and how is this taxed???

Thanks,

Mark Mitchell

import · December 17, 2002, 4:17pm

Re: Collections - Posted by tsweat

Posted by tsweat on December 17, 2002 at 17:17:17:

Maryland does require Debt Collection Agencies to be licensed and requires a $5,000 surety bond. I received this information a few months ago from the Commercial Law League when I inquired about the difference between the regulations for commercial and consumer collections.
How this information applies to your proposed activity, I don’t know, but you should definitely check with a collections attorney before engaging in any collections activity.
Ycan check in with the ACA at www.collector.com. Or the Commercial Law League at www.clla.org since that is where my info came from.

import · December 17, 2002, 9:52am

Re: Collections - Posted by Nate(DC)

Posted by Nate(DC) on December 17, 2002 at 10:52:12:

If your main concern is how to hide your income from the IRS, I would submit that perhaps collections is the right business for you. Or perhaps used car sales would be better. You definitely need a license for that, however.

NT

import · December 17, 2002, 5:26am

Re: Collections - Posted by Diane (TX)

Posted by Diane (TX) on December 17, 2002 at 06:26:37:

I’m not a lawyer, so take this for what it’s worth, but this is my understanding.

I would assume you need a license in MD to operate a collections agency. Collections are pretty heavily regulated. A question is whether, since you are assigned a judgment, you are considered to be stepping into the shoes of the original judgment holder and enforcing the judgment in his place. In that case, you may not be considered to be a debt collection agency.
If there’s one mortgage and it goes to foreclosure auction, unless there are excess proceeds, all non-government judgments and liens get wiped out. The foreclosing lender will add its costs and payments owed to the note balance, so that 10K spread will get eaten up pretty quickly. Nobody pays you if there are no excess proceeds.
If you collect on a contingency agreement from a judgment that you’ve been assigned, the contingency agreement is with the original judgment holder. The person who owes the judgment will pay you (the assignee), and you will pay the remaining 70% to the original judgment holder. It’s taxed as ordinary income subject to self-employment tax.