When a bank or a credit/loan company wants to publicly auction the collateral of a client or customer in order to collect the debt, the creditor is legally obligated to inform the debtor about this sale and give him a specific period of time so that if he doesn’t want the bank to sale the collateral, he can pay off his debt. The formal notification letter sent to the debtor about this matter is known as the notice of public sale of collateral.
Public Sale of Collateral Notice Importance:
Most people assume that the private and public sale of collateral is the same but there is a difference. If you are informed about the private sale of your collateral, you are allowed to pay off your debt but you can’t buy the property where on the other hand, when it is a public sale of collateral, you are also allowed to bid on the collateral in the auction as well as pay off the debt before the sale takes place. When a bank finds out that a client can’t pay his debt or isn’t paying the loan installments, they are allowed to sale his collateral (the property that the debtor pledges with the bank as insurance for the loan). They can either make this sale private by allowing a single buyer to buy the collateral or the bank can make the sale public. It is also known as the auction in which potential buyers are invited to bid on the collateral and the buyer with highest bid wins the sale.
This is a complicated and long process that can take weeks and months. That is why banks and credit companies prefer to inform the debtor about this sale so that if he wants to pay off his debt, he can arrange for the money. This way the process becomes simple and convenient for the banks and when they collect the debt from the debtor, they can just return the ownership documents of the collateral to the client where on the other hand, if they go with the public sale of collateral, they need to advertise the auction and invite potential buyers to bid on the collateral and after that, it can take weeks for the buyer to arrange for the money in exchange of the collateral. This is why it is really important for the banks and creditors to inform the debtor with this notice before auctioning his property in public.
Writing the Notice of Public Sale of Collateral:
The most important tip for you to write this formal notice of public sale of collateral is that you need to offer a specific period of time to the debtor so that if he wants, he can arrange for the money to pay off his debt and save his property from selling to other buyers. This duration can be anywhere from 1 week to 6 months as it depends on how a bank works and what their policies are regarding collecting the debt. Another important tip for you to write this letter is to provide details of the sale to the debtor so that if wants, he can also participate in the auction or if he is not allowed specifically to bid on the collateral, you also need to mention that clearly in the notice.
Free Sample Notice of Public Sale of Collateral
Here is preview of a Free Fill-able Notice of Public Sale of Collateral to assist newbie notice drafter,
Note: The green buttons at the header will not appear in print. They are placed just to help you clear, store or retrieve stored data quickly.
Here is download link for this Notice of Public Sale of Collateral,