Creditor Rights Law

Creditor rights law protects the lenders or creditors against the issues arising due to their debtors. Today, there is increasing debt crisis, and both borrowers and lenders are facing a lot of problems. Just like how the debtors have several legal programs to protect them from unfair clutches of collectors, loan sharks and unethical credit practices, the creditors too have legal rights to protect them from different issues they face in collecting the money owed to them.

Creditor rights law would vary from one state to another. However, most creditor rights related to foreclosure commonly cover few aspects like lien demands, garnished income, forced sales, and foreclosure requests. Irrespective of what the different state laws establish as creditors rights, the basic creditor rights law allows the creditor to instigate lawsuit against the debtor when the debtor has not honored their agreement. If the contract has been made according to the regulations set up by the federal and state credit laws, then the creditor has the right to move the case to court when there is a breach of contract by the borrower as regulated by law.

The creditor rights law permits the lender to posses and own the collateral (auto or home) if the borrower fails to keep his or her side of the bargain. The lender has the complete right to repossess or move for foreclosure, given that everything is processed as per the legal contractual terms. The creditor can sell the collateral and use the money as the payment for the pending amount. If the sale does not make up for the entire balance, the creditor is allowed to pursue legal action against the debtor. A favorable judgment usually allows the creditor to pursue collection by garnishing paychecks or bank accounts and by other means.

In case of unsecured loans, the creditor rights law allows the creditor to take the help of a collection agency or an attorney to collect the money owed. If the debtor has non-exempt assets, the lender can work out a settlement with those assets as collateral.

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