Creditor Rights

Creditors’ Rights Lawyers in Sandy, UT

Individuals and businesses can lend money or credit. There is always the risk that the borrower will not repay them and that they may leave them with a financial burden. Creditors have the right to protect themselves under both federal and state laws. The rights ensure that creditors have a way to collect their debts and recover losses.

Types Of Creditors

There are two main types of creditors and each type will have different degrees of protection. When a borrower defaults on payments, these are the rights each creditor has.

• Secured Creditors: These creditors have a lien or claim on an asset as collateral for a loan. Collateral could be real estate, vehicles, or other tangible items. These creditors are first in line to be repaid in cases of default or foreclosing. Examples of secured creditors include mortgage lenders, auto lenders, and loan providers.
• Unsecured Creditors: These creditors don’t have collateral backing their loans. They rely on the borrower’s promise to repay their loan. Credit card companies, medical providers, and utility companies are common examples. When the borrower defaults, these creditors will have a harder time recovering the funds and will have to take action through lawsuits and debt collection processes.

Creditor Rights In Debt Collection

Creditors are entitled to several rights when it comes to debts. The Fair Debt Collection Practices Act provides a set of rules to help determine how debt collection is carried out. These rights are available to creditors or third-party collectors:

• Contact the debtor: Creditors can call on the debtor for payment and demand them to pay the needed amount. Under FDCPA, collectors can only call when it is convenient (typically 8 a.m. to 8 p.m.). They can not call repeatedly or harass the debtor.
• Send written notices: Creditors have to provide written notice of the debt within five days after contacting the debtor. The notice should list the amount, name of the creditor, and steps that the debtor can use to dispute the debt.
• File a lawsuit: When a debtor fails to pay the debt, creditors can file a lawsuit in order to recover their money. If the creditor wins, they may be awarded a judgment, which will allow them to pursue other collection methods.

Creditor Rights Are Time-Sensitive

The rights that creditors can access are time-sensitive and need to be enacted if they want to obtain their cash. The longer a creditor waits to exercise the rights, the less likely they are to receive payment. A skilled lawyer will help propose a debt collection strategy that is proactive. They understand the time-sensitive nature and will do all in their power to help creditors receive their payment.

Those who owe debts often experience cash flow issues and juggle many payments. Creditors that file first will get paid from the limited money pool. This is why you need to file your claim or exercise your rights quickly.

Bankruptcy

A debtor could end up filing for bankruptcy, which will bring more rights for the creditor. Since creditors are often prohibited from continuing collection efforts before a business files bankruptcy, this can help them obtain what is rightfully theirs without more hassle.

Time is still a factor when it comes to bankruptcy and creditor rights. Missing court deadlines may require a creditor to waive its claim. When a creditor receives a Notice of Bankruptcy, they should take immediate action. Creditors will need to consult with their lawyers to take the best course of action.

Limitations On Creditor Rights

Creditors can experience limitations when it comes to collecting debts. The limitations will protect debtors from being abused or harassed by a collector. There is a statute of limitations for unpaid debts, which means that creditors can only attempt to collect their money before the limitations expire.

Help From WW Partners

Our legal team can help you minimize your losses as a creditor. We want to inform you of your rights and help you repossess the money you are rightfully owed. WW Partners focuses on many aspects of business law to ensure the fair treatment of all partners.

Understanding legal proceedings can be difficult, so talking with a lawyer can give you more confidence in your business proceedings. Balancing a need for fair treatment on all parts is something our legal team takes very seriously. Reach out to us to learn more about what we can do for your finances.