Buyer in seller financing not making his monthly payments.
So my dad sold a business (deli) to someone on a seller finance basis. We have a contract and everything and agreement was $1500 a month over 3 years. Loan has 5% interest on it as well. Buyer also has a rental unit from which he gets $1500 a month so he said that receivable will be the collateral.
So he has not paid in the last 4 months. He is saying his business is not going good anymore and he has no sales. Our daily sales used to be nearly 5x what he’s doing now. Tbh he doesn’t open the store on time, closes it early, so I do think that’s why he lost a lot of the established customer base.
Now my dad went to him multiple times asking for the money and he’s just been getting aggressive with my dad saying he doesn’t have money, store doesn’t make money, and just starts yelling. So we want to take legal action and speak to a lawyer considering it’s been 4months now.
I just called him today to speak to him myself. He was saying the same thing to me. I tried to speak to him calmly and we discussed few things. Problem is he gets frustrated and just starts raising his voice and won’t let you talk just keeps word vomiting and says the same thing. Says go ahead sue me, I don’t have the money and I can’t pay you. When I have the money I’ll pay you.
He is trying to sell the store too. He owes me $40k. He wants to sell the store for more than that. He said he has some offers for $30-$40k but he declined them because he wanted more (idk how true this is). I told him well you technically should take any offer you get pay off your loan to me as much as possible and then continue to pay off the remained. That way you’re not in the hole for the whole thing. (Contract has him as personal guaranteeing the loan). He kind of understood what I was saying and kept repeating until I find a buy I can’t get you the money.
I asked him what happened to the rent he was collecting that was supposed to the collateral. He said he went to his tenant and borrowed $8k from them. But now he’s not able to pay them back either. So he’s forgoing their rent ($1500/month) until that gets covered. He said he still owes them $6k so 4 more months to go. He said once that is done, he’ll redirect the $1500 rent to me. But until then he doesn’t have money to give me.
So now I am trying to set up a consultation with an attorney to see how we can file a law suit against him. Only thing is from what I understand, I will have to pay the consultation fee of $400, the retainer of $5000, and then anything billed after that. My contract says that buyer will be responsible to pay back legal fees but I assume that will just get added on to the $40k he owes me and it’ll be paid in installments as per the original 3 year agreement. But if this goes in front of a judge, it may also get restructured over more time.
So before paying $400 to consult with this attorney, should I give this guy another 4months to clear his debt with the tenant and in the mean time he looks for a buyer. Only thing is I don’t know how actively he’s looking for a buyer either. I know he has an ad up online and working with a business broker (my friend is in the industry and heard about it). But will the attorney tell me to do the same thing? Legally and financially what would my best options be? Just trying to gauge before I go spending money on a lawyer