Creditors’ rights are provisions put in place so creditors may collect money that is owed not just from consumers but from other creditors as well.
The first steps towards collecting a debt are to first approach non-court based remedies, and advance from there based upon the debtor interactions or lack thereof.
Collection Agencies and Self-Collection
The first step most creditors take is attempting to deal with the debt themselves by contacting the debtor directly to demand payment. If these attempts are unsuccessful or go unnoticed the debt may be transferred to another business specializing in debt collection.
Once the debt is sent to a collection agency, the agency must follow the Fair Debt Collection Practices Act. If they do not the debtor may file for damages, but this does not apply to creditors collecting their own debt. It only applies to agencies who regularly collect on debts owed to someone else.
These transactions are secured through property such as home and motor-vehicle loans. If a debtor fails to make regular payments the lender has the right to take back the property in order to cover the remaining debt or damages. These types of debts will take priority over unsecured transactions, but that also means it is the responsibility of the creditor to secure the interest (car, home, or other property).
Many creditors institute their rights to begin court proceedings to collect debts they are owed. In some cases, it is possible to seize property before a court decision is made but this is typically only utilized when perishable goods are the matter in question or goods that decline in value quickly.
If all else fails a creditor has the right to sue the debtor to collect money owed. Once a judgment is issued the creditor has the right to enforce the judgment by collecting enough of the debtor’s property to cover the debt.
LIENS: There are dozens for different liens, but the primary objective of a lien is to create a binding agreement between a creditor and debtor for a piece of property. A simple example would be a car has a lien on it if there is still a loan outstanding.
If no other collection attempts have been successful and the debtor owes a substantial amount of debt to several creditors then these creditors may have the right to petition the court for the debtor to go into involuntary bankruptcy. Once accepted by the courts the debtor may be forced to liquidate as many assets as possible to pay their creditors.
If you are a creditor with debt collection issues the best thing you can do is contact an attorney specializing in creditors rights so that you can get the money owed to you in an efficient manner with as little frustration as possible. Having a debt collection team on your side to walk you through your options and the legal process can save yourself the headache and time.