In the world of business law, every group has specific rights. Employers have rights, such as the right to terminate at-will employees without notice, employees have rights, consumers have rights, and parties on both ends of lending transactions have rights. When a borrower fails to repay his or her debt according to the agreement created by the lender, the lender, or creditor, has the right to take action to get their money back.
If you are a creditor seeking repayment from one or more borrowers, work with an experienced business lawyer to determine how to collect your money without violating your borrowers’ rights. You have rights, but you also have restrictions. Know these before you move forward with collection attempts.
You absolutely have the right to seek the money you are owed. This is your most basic right as a creditor. In nearly all collection cases, collection attempts begin privately between the creditor and the borrower. You have the right to send letters, emails, and phone calls to your borrower to attempt to collect your money. These are known as self-help remedies and are governed by the Fair Debt Collection Practices Act.
When your self-help remedies are not successful, you have the right to get the court involved to recover your money through a lawsuit. If the court rules in your favor, you have the right to collect money from the debtor to cover their debt. This may be supervised by a sheriff, who may hold a sale of the debtor’s property to use the proceeds to satisfy his or her debt.
Often, other collection methods are employed before turning to a lawsuit. If the debt is tied up in a piece of tangible property whose title you hold, you may complete a replevin action, which involves the seizure of the property and its return to you. Generally, this is facilitated by a sheriff. In some cases, you can also complete an attachment proceeding, which is a court order for the creditor to recover property from the debtor. Attachment proceedings are rare and generally only used when debtors are believed to be about to dispose of the property.
You may also place a lien on the debtor’s property. This is a legal order to transfer the property to you until the debtor repays the debt or the debt is discharged. To obtain a lien against a piece of property, you must file a lawsuit and have the court rule in your favor, granting you the lien.
You have the right to initiate an involuntary bankruptcy proceeding for your debtor. This is completed through a petition to the bankruptcy court, which may result in the debtor being required to liquidate his or her possessions to satisfy the debt or to create a repayment plan for the debt. If you are considering this option, work closely with a lawyer to ensure that you do not file your petition in bad faith. Bad faith involuntary bankruptcy petitions can put you at risk for criminal penalties.
You do not have the right to harass your debtor into repaying the money he or she owes you. Refer to Wisconsin’s harassment law to make sure you are not acting in a manner that can be considered to be harassment.
When an individual files for bankruptcy, the automatic stay goes into place. This is a legal requirement that his or her creditors halt their collection efforts while the bankruptcy is pending. You must comply with this requirement. If your borrower files for Chapter 13 bankruptcy, you have the right to attend his or her creditors’ meetings and pose any objections you have to his or her proposed bankruptcy plan. If you are a secured creditor, your repayment is a higher priority than unsecured creditors’ repayment in cases involving the same of assets to satisfy debts, such as Chapter 7 liquidation and property sales.
As a creditor, you lend money with the intention of having it returned to you. Our team of experienced Appleton business lawyers is on your side to help you recover the money your indebted borrower owes you. Contact our team at Hammett, Bellin & Oswald, LLC today to set up your initial consultation with us, during which we will go over all the relevant facts of your case to determine the most productive way to proceed with your collection.