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Three collection options for creditors

Creditors continue to struggle with debtors meeting their obligations. Creditors in this situation have rights to encourage repayment. Three collection options that are generally available include:

  • Self-help. Business owners do not have their hands tied when it comes to collecting debt. Creditors can generally contact the debtor directly and request payment. If this fails, the creditor can consider transferring the debt to a debt collection agency. Although this may seem like an easy way to collect payment, if the agency receives payment it is often significantly lower than the amount actually owed.
  • Replevin. A replevin action is basically another option which allows the creditor to recover property. In these actions, instead of demanding payment the creditor seeks return of the property. In most cases, the creditor must meet certain notice and hearing requirements before actually taking back the property. 
  • Court intervention. Court involvement can occur in two basic ways. The first is a suit to require the debtor to return goods. This can be beneficial, particularly in cases involving perishables or goods that lose value rapidly. The second form of court intervention involves a lawsuit against the debtor. If successful, the court will issue a judgment in favor of the creditor. The creditor often follows through by having the sheriff assist in claiming property from the debtor. Instead of keeping the property, which is generally the goal of a replevin action, the property is sold and the profits are used to repay the creditor.

These are just three remedies for creditors. Any business, entrepreneur or individual struggling with repayment has options. Contact an experienced collection and creditors' rights attorney to discuss your options and find the best course of action for your situation.

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