Debt Recovery in the United States
Collection of monies owed, usually under terms of a contract. Debt recovery cases span a wide array of situations, but typically stem from disputes between businesses or businesses and individuals. The disputes are commonly over obligations set forth in voluntarily entered agreements or contracts. Debt recovery situations are often settled without litigation, but this category produces extensive litigation nonetheless. Most often, these cases involve contracts through which products or services are conveyed or by which money is loaned by one party to another. In most of these situations, the plaintiff has not received payment as provided in the contract and is seeking some kind of judicial remedy. Also included in this category of debt recovery are those actions seeking payment of claims under terms of insurance contracts. A related category of cases involves bankruptcy where legal protection is sought by those owing money. Here the legal interests of the borrower are balanced against the creditor’s interest in recovering some of the debt.
See Also
Default Judgment (Civil Process).
Analysis and Relevance
Some debt recovery actions are relatively simple, while others are complex. Commercial law actions involving two or more businesses may be quite involved. Individual credit situations are more numerous and quite straightforward. For example, an individual contracts to buy or rent a house or car. If the person fails to make the contracted payments, the creditor seeks relief. The courts have several options in these cases. A foreclosure or eviction proceeding can eventually return property to the seller or creditor. This allows the seller to recover by conveying the property to someone who will make the payments. Creditors can repossess items such as cars by a similar process. Courts have additional options as well. A court may order the garnishment of a debtor’s wages. This allows the court to obtain a portion of the debtor’s earnings before the debtor is paid. The proceeds of the garnishment are then paid to the party who obtained the order to garnish. A lien or claim against a debtor’s property may be issued instead as a way to secure resources to repay a debt. Plaintiffs almost always prevail in debt recovery cases because the defendant has normally failed to abide by explicit provisions of a contract. Indeed, in most debt recovery situations, defendants fail to even appear, and plaintiffs then are granted default judgments.
Notes and References
- Definition of Debt Recovery from the American Law Dictionary, 1991, California