Debtor & Creditor law governs situations where one party is unable to pay a monetary sum to another. Creditor & Debtor law is governed by the principle of indebtedness. Indebtedness exists where a person is under a present legal obligation to pay in the present or a future time to another person a sum of money. The person with the legal obligation to pay the sum of money is called the debtor while the person who is owed the monetary sum is called the creditor.

Types of Creditors:

Generally, there are three main types of creditors. First, there are
those creditors who have a lien against a particular piece of property.
This particular piece of property (or proceeds from its sale or foreclosure) must be used to satisfy the debt to the lien-creditor before it can be used to satisfy debts to any other creditors. A lien may arise many different ways, such as through statute, agreement between the parties, or judicial proceeding. Second, there are creditors who have a priority interest. A priority interest usually arises through statutory law. If a creditor has a priority interest than his debt must be paid when the debtor becomes insolvent or before any other debts are paid to secondary creditors. The third and final type of creditor is one who has neither a lien against the debtor’s property or is the subject of a statutory priority.

Creditor Remedies:

There are many ways a creditor can have debts owed to them satisified. Creditors use judicial and statutory processes to have debts satisfied. The first remedy, is called Attachment. Attachement, is a limited statutory remedy whereby a creditor has the property of a debtor seized to satisfy an existing debt. The second remedy is called Garnishment. Garnishment, allows a creditor to collect part of a debt (debtor’s wages) to satisfy the existing obligation. The third remedy is called Replevin. Replevin, allows a creditor to seize personal goods that the debtor has a property interest in, to satisfy the existing debt. The fourth remdey is called Receivership. Recivership, involves the appointing of a third party by a court of law to dispose of the debtor’s property in order to satisfy the existing debt. Creditors commonly seek to create a lien on a debtor’s property through a judicial process of lien creation, which is governed by state law. Once a lien has been created, state statutory law governs how the lien is executed against the debtor’s property. The sale of property subject to a lien to satisfy the debt is also governed by state statutory law. Federal and state statutes, and the Federal Consumer Credit Protection Act also limit the type of property that can be used to satisfy a debt.

Debtor Remedies:

A debtor has potential remedies against exisiting creditors as well. One type of remedy is called bankruptcy. Bankruptcy, is defined as the legally declared inability or impairment of ability of an individual (debtor) or organization to pay its existing creditors. Simply put, bankruptcy is a way for individuals and business who are overwhelmed by debt to discharge their existing debts or reorganize their debts and start fresh. Creditors may file a bankruptcy action against a debtor (known as an involuntary bankruptcy) in an effort to recoup a portion of what they are owed or initiate a restructuring of payment owed to them. In most cases, bankruptcy is usually initiated by the debtor (know as an voluntary bankruptcy) that is filed by the insolvent debtor or organization) to absolve debts or monetary obligations to exisiting creditors. Bankruptcy proceedings take
place in bankruptcy courts. Bankrputcy court is a type of federal court that has jurisdiction over bankruptcy cases in the United States. A speical federal bankrputcy judge is appointed to preside over the hearing. It is important to note that bankruptcy cases cannot be filed in state court, though some state courts may hear bankrputcy proceedings in certain situations.

Attorneys specializing in Creditor & Debtor Law:

Attorneys specializing in Creditor & Debtor law must have insight and knowledge in areas such as Bankruptcy Law, Property Law, Tax Law, Commercial Law, Consumer Law and many other legal areas that govern the existing legal obligations between potential creditors and debtors. Attorneys who practice Creditor & Debtor law usually work in bankruptcy realm and they help their clients absolve their existing debts or help create payment plans to ease their financial burdens against existing creditors .Its important to note that these Creditor & Debtor attorneys represent their clients in all matters involving monetary obligations owed to third
parties.

Individuals looking for an attorney specializing in Creditor & Debtor law need to find someone who is well versed in the United States Bankruptcy Code (Title 11 of the United States Code) and the Federal Rules of Bankruptcy Procedure. A good attorney specializing in Creditor & Debtor law will also understand these subtle differences between the many different bankruptcy chapter filings (Chapter 7, 9, 11, 13, etc.) and apply the appropriate rules and regulations in preparing the appropriate case, negotiating the
right settlement, or presenting the correct evidence and arguments in
ipursuing the proper course of action for a potential creditor or debtor.

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