Kurt,
I am not an attorney. But as you can read from a previous post, I have over 18years of experience in this field. The way that I have chosen to operate is to employ a claims adminisrator for a salary of approx 32k/year. As a matter of customer service, we pay the claim to our customer almost immediately. Then the claims administrator files a small claims action against the appropriate party ( most time the borrower) If the claim exceeds the small claims allowance, we have an agreement with a  local attorney so the file goes to him. My claims admin person has a 93% success rate in recovery via small claims. This process keeps the customer happy, and at the same time affords me the opportunity to recover the money we lay out. Hope this helps.