Collections; Creditors Rights

When a business’s customer fails to pay his or her debts, the business (the “creditor” to which the debt is owed) has several available remedies to help collect the money from the customer (the “debtor”).

Debts can be “secured” or “unsecured.” Most consumer transactions are unsecured, but home and motor-vehicle financing are usually secured by the property. If a car loan is secured and the debtor fails to make the payments, the lender can repossess the car in order to recover at least part of the loan.

Two of the more common pre-judgment remedies are replevin and attachment. In a replevin action, a creditor, which holds a lien upon the personal property that is the subject of a debt, may repossess that property if the debt is not repaid. In an attachment proceeding, the attaching creditor may be allowed to liquidate specific property of the debtor.

Once a judgment is obtained, the creditor can execute on the judgment with the assistance of the local sheriff. The sheriff can arrange for a sale of the debtor’s property, the proceeds of which are applied against the judgment debt.