A creditor is an individual or entity that lends money to another party. The person or entity that owes money becomes a debtor. The creditor has the right to protect themselves and their assets. They have the right to take back what the debtor owes them. Their rights are contingent on the type of debt and whether the debtor files for bankruptcy.
A creditor has the right to demand payment
A creditor can contact the individual or entity that owes them money and demand payment without court intervention. But a debtor might try to pursue counterclaims and recover damages from the creditor through a lawsuit. Creditors must know how to rightfully collect debt without violating any state and federal laws.
A creditor’s right to put a lien
A lien is the creditor’s legal right to a debtor’s property. Secured debts are loans that have collateral. Collateral can be anything of value, such as a house, property, vehicle, jewelry, life insurance or other valuable assets. A creditor who issues secured debt can seize the debtor’s property in the agreement if the debtor defaults on payments. Similarly, a creditor of unsecured debt can also go to court and obtain a judgment lien for unpaid debts. However, secured debt usually takes precedence over unsecured debt when determining who has the right to repossess a debtor’s property.
A creditor’s right to wage garnishment
In Ohio, wage garnishment is one of the more popular methods a creditor can use to take back what the debtor owes them. The creditor will need to obtain a judgment against the debtor to garnish the debtor’s wages. They can retrieve a maximum of 25 percent of the monthly salary of the debtor. The amount deductible from wages can increase if the debt is a court-ordered financial obligation, such as child support and student loans. A debtor who files for bankruptcy might be able to prevent wage garnishment on some kinds of debt.
Creditors lend money to people and businesses to help them stay afloat or recover from insolvency. It does not mean they do not need the money. They have the right to pursue all legal avenues to reclaim what was theirs, even when a debtor declares bankruptcy.