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How can a creditor make sure to collect on a debt?

On Behalf of | Jan 24, 2024 | Creditors' Rights

Operating a business in Nebraska requires providing goods or services that customers want, understanding the law and making sure to take the necessary steps to earn a profit. Part of that is ensuring that customers and other entities who owe money are compelled to pay.

Of course, there are acts that are prohibited under the Fair Debt Collection Practices Act such as harassment, abuse, making false representations and when and how contact can be made. Still, if a business or individual is not receiving payment they are entitled to, they can go through the legal process for a resolution.

Know the law when trying to collect on a debt

Just as the FDCPA is in place across the nation, Nebraska has its own laws saying what a creditor can and cannot do. They can contact people who might have information as to what type of property the debtor has that can be seized to satisfy the debt. They can file a suit to try and collect on the debt. They can get in touch with people who are related to the debtor once they have written authorization to do so as part of the debt agreement at its inception.

Debt can accumulate in myriad ways and for a litany of businesses and entities. That includes a lender loaning money to a person or business, a landlord for residential or commercial property, a business and individuals. Once a debtor falls behind or stops paying entirely, there are strategies that can be effective to get what is owed.

Loans, for example, are generally granted based on collateral. If the person who borrowed the money owned property that can be foreclosed upon to settled the debt, that can be a way for the creditor to recover what they are owed.

In some instances, the debtor files for bankruptcy. Just as the debtor gets some relief with the automatic stay in which debt collectors are stopped from trying to collect, the creditor can seek relief from the automatic stay. It can also call into question whether certain debts are dischargeable. For those who are filing for a Chapter 11 reorganization, a creditor could object to the plan they have put forth.

Creditors have the right to collect on what they are owed

In recent years, debt collection has been cast in a negative light. However, if businesses cannot collect on what is owed, they will be unable to operate. They have creditors’ rights just like debtors do. When confronted with a debtor who is not paying and the initial attempts to collect are unsuccessful, it is imperative to know the legal options. Having the right information can be vital to getting effective results.