Creditor's rights
Encyclopedia
Creditor's rights is a legal term
used to describe the set of procedural provisions designed to protect the ability of creditors - persons who are owed money - to collect the money that they are owed. These provisions vary from one jurisdiction
to another, and may include the ability of a creditor to put a lien
on a debtor's property, to effect a seizure and forced sale
of the debtor's property, to effect a garnishment
of the debtor's wages, and to have certain purchases or gifts made by the debtor set aside as fraudulent conveyance
s. The rights of a particular creditor usually depend in part on the reason for which the debt is owed, and the terms of any writing memorializing the debt.
Generally, creditors can be divided between those who "perfected
" their interest by establishing an appropriate public record of the debt and any property claimed as collateral for it, and those who have not. Creditors may also be classed according to whether they are "in possession" of the collateral, and by whether the debt was created as a purchase money security interest. A creditor may generally ask a court to set aside a fraudulent conveyance
designed to move the debtor's property or funds out of their reach.
s have a specialized practice area focused on the collection of such debts. Such attorneys are frequently referred to as collection attorneys or collection lawyers.
Attorneys
who practice in the area of "creditor's rights" perform one or all of the following:
Law
Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...
used to describe the set of procedural provisions designed to protect the ability of creditors - persons who are owed money - to collect the money that they are owed. These provisions vary from one jurisdiction
Jurisdiction
Jurisdiction is the practical authority granted to a formally constituted legal body or to a political leader to deal with and make pronouncements on legal matters and, by implication, to administer justice within a defined area of responsibility...
to another, and may include the ability of a creditor to put a lien
Lien
In law, a lien is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation...
on a debtor's property, to effect a seizure and forced sale
Forced sale
A Forced Sale of Real Estate is an action that taken in a civil court forcing the owners to sell the property at issue and divide the profits. A forced sale would be the result of a petition to partition action.- Why forced sales occur :...
of the debtor's property, to effect a garnishment
Garnishment
A garnishment is a means of collecting a monetary judgment against a defendant by ordering a third party to pay money, otherwise owed to the defendant, directly to the plaintiff...
of the debtor's wages, and to have certain purchases or gifts made by the debtor set aside as fraudulent conveyance
Fraudulent conveyance
A fraudulent conveyance, or fraudulent transfer, is a civil cause of action. It arises in debtor/creditor relations, particularly with reference to insolvent debtors. The cause of action is typically brought by creditors or by bankruptcy trustees...
s. The rights of a particular creditor usually depend in part on the reason for which the debt is owed, and the terms of any writing memorializing the debt.
Priority of creditors
Creditor's rights deal not only with the rights of creditors against the debtor, but also with the rights of creditors against one another. Where multiple creditors claim a right to levy against a particular piece of property, or against the debtor's accounts in general, the rules governing creditor's rights determine which creditor has the strongest right to any particular relief.Generally, creditors can be divided between those who "perfected
Perfection (law)
In law, perfection relates to the additional steps required to be taken in relation to a security interest in order to make it effective against third parties and/or to retain its effectiveness in the event of default by the grantor of the security interest...
" their interest by establishing an appropriate public record of the debt and any property claimed as collateral for it, and those who have not. Creditors may also be classed according to whether they are "in possession" of the collateral, and by whether the debt was created as a purchase money security interest. A creditor may generally ask a court to set aside a fraudulent conveyance
Fraudulent conveyance
A fraudulent conveyance, or fraudulent transfer, is a civil cause of action. It arises in debtor/creditor relations, particularly with reference to insolvent debtors. The cause of action is typically brought by creditors or by bankruptcy trustees...
designed to move the debtor's property or funds out of their reach.
Specialized legal practices
Some lawyerLawyer
A lawyer, according to Black's Law Dictionary, is "a person learned in the law; as an attorney, counsel or solicitor; a person who is practicing law." Law is the system of rules of conduct established by the sovereign government of a society to correct wrongs, maintain the stability of political...
s have a specialized practice area focused on the collection of such debts. Such attorneys are frequently referred to as collection attorneys or collection lawyers.
Attorneys
Lawyer
A lawyer, according to Black's Law Dictionary, is "a person learned in the law; as an attorney, counsel or solicitor; a person who is practicing law." Law is the system of rules of conduct established by the sovereign government of a society to correct wrongs, maintain the stability of political...
who practice in the area of "creditor's rights" perform one or all of the following:
- File lawsuits and using other legal collection techniques to collect consumerConsumerConsumer is a broad label for any individuals or households that use goods generated within the economy. The concept of a consumer occurs in different contexts, so that the usage and significance of the term may vary.-Economics and marketing:...
debts (i.e., debts owed by individuals) - File lawsuits and using other legal collection techniques to collect commercial debts (i.e. debts owed by businesses)
- Represent creditor's interests in a bankruptcyBankruptcyBankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
proceeding - Foreclose homes or commercial real estate if the purchaser defaults on payment
- Recover (or replevinReplevinIn creditors' rights law, replevin, sometimes known as "claim and delivery," is a legal remedy for a person to recover goods unlawfully withheld from his or her possession, by means of a special form of legal process in which a court may require a defendant to return specific goods to the...
) secured goods (e.g., automobiles) if the purchaser defaults on payment
See also
- Accounts receivableAccounts receivableAccounts receivable also known as Debtors, is money owed to a business by its clients and shown on its Balance Sheet as an asset...
- Bankruptcy law
- Collection agencyCollection agencyA collection agency is a business that pursues payments of debts owed by individuals or businesses. Most collection agencies operate as agents of creditors and collect debts for a fee or percentage of the total amount owed....
- Contract law
- Contribution claim (legal)Contribution claim (legal)A contribution claim is a claim brought by one or more defendants to a lawsuit for money damages brought by a plaintiff. A contribution claim asserts the party is entitled to "contribution" from a third party for any money damages awarded to the plaintiff.For example, if a plaintiff sues a...
- CreditorCreditorA creditor is a party that has a claim to the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property or service to the second party under the assumption that the second party will return an equivalent property or...
- DebtorDebtorA debtor is an entity that owes a debt to someone else. The entity may be an individual, a firm, a government, a company or other legal person. The counterparty is called a creditor...
- Fair Debt Collection Practices ActFair Debt Collection Practices ActThe Fair Debt Collection Practices Act , et seq., is a United States statute added in 1978 as Title VIII of the Consumer Credit Protection Act...