What Can a Creditor Do To Collect a Debt?

When a debtor owes money to a creditor, there are laws that apply to determine the steps a creditor can take in order to try to collect the unpaid balance from the debtor. The Fair Debt Collection Practices Act restricts behaviors considered “abusive,” such as calling family and friends of the debtor; calling too early in the morning; or sending documents that look like legal papers but that aren’t. Although there are limitations in place and protections for debtors, this does not mean that a creditor has no available tools to try to collect a debt. 

An Irvine, CA business lawyer can provide comprehensive information on what a creditor can (and cannot) do to collect a debt.  Brown & Charbonneau, LLP has represented many clients who are facing legal issues related to debt collection and we can put our background and experience to work to help you. Call today to learn more.

What Can a Creditor Do to Collect a Debt?

The rights of a creditor to collect a debt will vary depending upon the type of debt that is owed.  A creditor may have the easiest time taking steps to collect a debt if the debt is secured. The creditor can follow the process for obtaining the secured collateral upon nonpayment and can subsequently sell the collateral to try to recover the unpaid balance of the loan. For example, a mortgage lender can foreclose on a home if mortgage debt goes unpaid, and a car loan lender can repossess a car if the vehicle loan payments are not met.

If the debt is unsecured, like a personal credit card or a bank loan, there are different steps a creditor can take to try to collect a debt. The creditor, for example, can go to court to secure a judgment against the debtor for the unpaid balance that is due on the loan. The creditor will need to provide information showing the court that there is an outstanding balance due and that the debtor is in default. If the court determines that this is true, a judgment will be entered against the debtor. The judgment will show up on a debtor’s credit report, and it also gives the creditor the right to pursue further enforcement efforts.

If a judgment has been entered against a debtor and the debtor does not pay, the creditor may go back to court and get a lien placed on the debtor’s property or may get a court order to garnish the debtor’s wages. This would mean that the debtor has money taken directly from his or her paycheck from the employer before the debtor receives the funds.

Brown & Charbonneau, LLP can provide information and advice about foreclosure, repossession, legal action related to debt collection, liens and wage garnishment, and rules and limitations imposed by the Fair Debt Collection Practices Act. To learn more about how our Irvine, CA business law attorneys can provide you with assistance related to all aspects of a creditor effort to collect a debt, call today.