Lender liability lawsuits tend to be a thorn in the flesh of many lenders. They have to deal with loan defaulters but also have to incur costs of the lawsuits filed by the borrowers. The borrower is bound to sue you as a lender with allegations such as failure to fund the loan, breach of loan terms and conditions, failure to disburse the loan to the borrower, and interfering with the project attached to the loan.
In most cases, most borrowers use lender liability lawsuits to reap great fortunes from lenders. However, just like attorney malpractice, contractual disputes, employment discrimination cases, and intellectual property lawsuits, this also can be solved without having to attend long complex civil litigation. You can use alternative dispute resolution such as hiring a mediator or an arbitrator to solve the dispute between the lender and the borrower. But also, such lawsuits can be prevented through:
Adhere To A Reliable Procedure
Having a set of procedures and policies to be followed while seeking remedies for a contractual dispute or a lender liability case offers significant advantages. They provide a clear order which borrowers can follow to seek compensation or raise their concerns. This prevents unnecessary conflicts and having to run court battles which are not only time-consuming but also expensive. In case, the borrower has an issue, he or she will have a chain of command or steps to undertake to seek help. This is a very important approach towards preventing unnecessary commercial litigation processes.
Issue A Notice
Notifying the borrower after failing to adhere to the loan repayment terms is one of the ways to prevent finding yourself in a toxic lender liability lawsuit. This will allow the borrower to explore other alternatives on how to repay the loan within a reasonable amount of time. In this regard, it will be very easy to come up with a common understanding that will ensure a proper dispute resolution is arrived at without any issues.
Identify The Party Suing You
It will be better to identify if you are being sued by the right party. This helps prevent possibilities of finding yourself being exploited by a loan defaulter. So, if the lender liability lawsuit has ground, ensure it is coming from the right party. Make sure you are not being targeted by a selfish individual intending to make money from you.
Most lawsuits tend to be very stressful due to the resources spent and time taken to reach a solution. There are legal fees to be paid which are very expensive. Furthermore, if found guilty you have to deal with ruling giving which will not resonate well with you. In the event of a lender liability lawsuit, you have to ensure the loan defaulter does not extort money from you. Ensure the grounds of the lawsuits are very credible. Some borrowers might file this lawsuit with the aim to come up with terms and conditions that favor them. To prevent such an occurrence, make sure you have well-outlined procedures of reporting an incident of lender liability, know the party suing you, and ensure you find ways to resolve the dispute without having to undergo a tedious litigation process.