When customers fail to pay their debts, business creditors have several legal ways to collect the money. Legal remedies don’t always involve the courts, but the ones that do can be complex. In this article is a list of legal avenues available to creditors.
Collection Agencies and DIY Remedies
Many creditors’ initial attempts with debt collections in St. Louis, MO don’t involve legal action. Firstly, a creditor may call the debtor and demand full payment. If such attempts fail, a creditor can pass the debtor’s accounts to a collection agency. Collection firms are regulated by the government to avoid abuse; for instance, the FDCPA (Fair Debt Collection Practices Act) details when, where and how collections agents may contact debtors. If a collector violates the FDCPA, a debtor and his or her attorney may take legal action.
Secure Transactions
Other avenues are available to raise the likelihood of debt collections in St. Louis, MO. Secure transactions are loans or sales in which the debtor furnishes collateral to ensure payment. If a competing claim to the property exists, secured creditors take priority over non-secured creditors. To attain such a high status, creditors must file certain documents. Most transactions aren’t secured, but car and home loans are usually secured by the property in question.
Remedies Involving the Courts
In some cases, creditors go to court to collect debts. In emergency situations, however, the creditor may be allowed to seize a debtor’s assets before the matter is decided. These methods are extraordinary in nature, and should be used only when other methods are impractical.
Two common tactics in debt collections in St. Louis, MO, are attachment and replevin (recovery of goods). Attachment is similar to wage garnishment, while replevin allows a creditor who holds title to a property to repossess it if the debt isn’t paid. For instance, a furniture leasing company may be able to take its property back if payments aren’t made. Requirements can be waived if the property is in danger of being destroyed. Click here for more details about the debt collections in St. Louis, MO.
If none of the above tactics succeeds and a significant amount of money is owed, creditors may be able to start involuntary bankruptcy proceedings. If the petition is accepted, a debtor may have to sell assets to pay his or her debts, or they may have to create a reorganization plan. A debt collection attorney with Van Dillen & Flood, P.C. can assist creditors in the fair collection of a debt, and they can also protect debtors’ legal rights.
