Creditor-Debtor law controls situations in which one party owes money to another. The party who owes money is called the debtor, while the party who is owed money from the debtor is called the creditor. Common types of creditors include credit card companies, hospitals and doctors’ officers, utility companies, mortgage lenders, auto lenders, title lenders, and payday lenders.
Some creditors are secured, and some are unsecured. The primary difference relates to how a creditor may attempt to be repaid if the debtor defaults on repaying the debt. For example, where a consumer has taken a bank loan to purchase a new car, the bank will take a secured interest in the car. So in the event the consumer defaults on the car loan, the lender can take the car, sell it, and apply the proceeds toward what is owed on the loan (sometimes referred to as replevin). The process is similar for mortgage lenders, who have secured interests in borrowers’ homes (and upon default, the lender will foreclose).
Unsecured creditors don’t have the same rights as secured creditors. Therefore, unsecured creditors like credit card companies, hospitals, and utility companies, must choose other avenues to be repaid by a defaulting debtor. Most frequently, that takes the form of a lawsuit for breach of contract (based on the debtor’s failure to pay as agreed), and sometimes on equitable grounds where there was no written contract (based on the value of goods or services the debtor’s willingly received, but for which the debtor failed to pay).
There is a growing body of law regarding the collection of consumer debts, including the federal Fair Debt Collection Practices Act. And many states, too, have enacted their own consumer-protection statutes. So special care must be taken by creditors and their representatives in trying to collect from debtors.
If you or your business are in need of a creditor-debtor attorney to secure repayment of a debt that is owed to you, contact The Flynn Law Firm’s experienced lawyers today.