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Two must-do’s when extending credit to an individual.
12/02/2011
Two must-do’s when extending credit to an individual.

Starting a law suit against an individual poses two unique problems that do not exist when suing a corporation or an LLC.  Suit against an individual requires time-consuming delivery of the suit papers, at the individual’s work or home address, which can easily be contested, at any time, even years after getting a judgment.  An individual may live at an unknown address at the time the debt arises, especially after running out on a lease, or years after signing a credit application.  Thankfully, there is a simple legal solution, but it can only be implemented before the problem arises, by including the correct provision in a lease, contract, or credit application. New York law permits an individual to waive the strict requirements of legal service of process by signing a contract providing for alternative means of service.  Essentially, you can make up your own rule for service of process.  The provision that we recommend is: “In any action for payment of any unpaid charge, personal service of the summons and complaint is waived and service shall be made by first class mail with postal mail receipt to my address below, or my last known address.”

The other problem occurring when suing an individual arises from the Military Law.  Courts are not allowed to give a default judgment against an individual debtor unless there is strict proof that the individual is not in the military.  Usually, the necessary proof is gotten by a telephone investigation, process server, or, the easiest way of all, directly from the US Military’s web site.  However, getting a meaningful result from the US Military web site that is acceptable to the court requires the individual’s social security number, by a form signed by the individual.  In actuality, this means that the omission of getting an individual to include his or her social security number in any contract, lease, or credit application could render it impossible to ever get a judgment. Therefore, it is essential that before extending any credit to an individual, or signing a lease with an individual, the social security number must be stated in the lease or credit application.

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