Frequently Asked Questions About Creditors’ Rights
Creditors and debtors alike often need clarification about the legal aspects of their respective obligations. At The Cohn Law Firm, LLC, our attorneys often answer questions such as those below. To bring your own questions to our attention, schedule a consultation.
What rights do creditors have?
In a nutshell, creditors have the right to expect repayment of debts incurred through legitimate contracts and other circumstances that create legitimate obligations by the debtors. When debtors are in default, creditors have the right to use various legal means to collect on debts.
Do creditors’ rights vary by state?
The essence of a creditor’s right to collect on debts applies in all states, but details regarding timing and methods may differ. For example, in some states, a creditor may foreclose on a debtor’s mortgage without going to court. In other states, complex steps involving a court are required.
What means do creditors have to collect debts?
Examples of ways in which creditors can collect on debts include:
- Placing liens on property
- Garnishing wages
- Setting aside fraudulent conveyances
- Contacting a debtor or their family members
These means may be altered or halted through an automatic stay once a creditor has filed for bankruptcy.
Does bankruptcy void creditors’ rights?
Personal or business bankruptcy does not necessarily void creditors’ rights altogether. However, it can put limits on how and when a creditor can seek to collect on debts. Rules exist for Chapter 7, 11 and 13 bankruptcies about which creditors will be repaid and in what order. Also, bankruptcy does not remove liens on property. For more information, consult with a creditors’ rights attorney.
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Our business law and creditors’ rights lawyers look forward to hearing about your questions related to the topics above or other legal concerns.