Debt collection by unsecured creditors

On behalf of Bankruptcy Law Firm of Clare Casas on Wednesday, December 17, 2014.

Some Florida residents may be interested in the different collection options available to secured and unsecured creditors. In general, secured creditors have the option of seizing collateral pledged at the time the original debt was incurred, while unsecured creditors do not have this option. However, an unsecured creditor can initiate a debt collection lawsuit against a debtor and thereby attain the right to seize the person’s assets.

If an unsecured creditor sues and wins in court, it may be able to garnish a debtor’s paychecks or attach liens to their real estate assets. A judgment lien can prevent someone from selling their home until the debt represented by the lien has been paid off. In effect, this sort of situation could potentially prevent someone from moving from their home while the debt is unpaid.

It may also be possible for a creditor to file a writ of execution on a property that has had a lien attached to it. A writ of execution can allow a creditor the right to seize and sell a person’s property as either complete or partial payment for the debt they have incurred. In this way, it may be possible for an unsecured creditor to take advantage of similar legal options for collection that a secured creditor would have.

As such, someone with a large amount of unsecured debt may wish to consult the options with an attorney before the situation has a chance to escalate further. In some cases, it may be possible to negotiate terms for payment plans with creditors that are more advantageous to a debtor than would otherwise be possible. Some situations may even call for a bankruptcy filing, which can be one of the most effective means of putting a stop to creditor harassment.

Source: SF Gate, “Can Unsecured Creditors Collect Their Debt from the Sale of My Home?“, Ciele Edwards, December 12, 2014