Some companies initially keep debt collection in-house. However, if the people who owe the organization money aren’t cooperative with collection efforts, then it may be necessary to employ more aggressive tactics.
Certain organizations sell their debts to outside collection agencies. Many others partner with attorneys who can help them explore legal avenues for securing repayment for significant outstanding debts. Litigation can be costly, and some creditors may worry about how likely they are to actually recover what they invest in more assertive debt collection efforts.
Taking a debtor to court can actually be one of the most effective ways to compel repayment from someone who has thus far attempted to avoid their financial obligations. What forms of relief can the civil courts provide?
Wage garnishment
One of the most effective ways to collect on a debt when an individual is not voluntarily compliant is through wage garnishment. The courts can authorize creditors to intercept a portion of an individual’s wages before the funds reach the debtor. Employers can send funds directly to those who have a judgment, much like what happens when a parent has child support obligations. The exact amount that companies can pursue depends on the extent of the debt, the income of the debtor and the jurisdiction in which they filed the lawsuit. Wage garnishment can be effective as it leaves nothing up to the debtor and instead automatically allocates funds to the creditor.
Foreclosure or repossession
When lenders provide financial support for a large transaction, the item purchased is often the collateral for the loan. Different rules apply depending on the nature of the resources. If the property is the debtor’s primary residence, they have to miss multiple back-to-back months of payments to be at risk of foreclosure. If the collateral property is a vehicle, no advance warning is necessary in most cases. The terms included in the loan documents determine when the lender can repossess.
Property liens
In some cases, creditors may be able to use valuable assets as collateral for debt repayment even if they did not finance the acquisition of that asset. For example, construction companies left unpaid by a homeowner can request a lien against the residence that remains in effect until the business receives payment in full for the total outstanding amount due for the services provided.
In some cases, there may be other options available as well depending on the situation. Consulting with a professional familiar with debt collections can help frustrated creditors demand accountability from those trying to avoid their financial responsibilities. Going to court is one of the most effective solutions for those who have proven unwilling to voluntarily fulfill their financial obligations.