Creditor's rights are the procedural provisions designed to protect the ability of creditors—persons who are owed money—to collect the money that they are owed. These provisions vary from one jurisdiction to another, and may include the ability of a creditor to put a lien on a debtor's property, to effect a seizure and forced sale of the debtor's property, to effect a garnishment of the debtor's wages, and to have certain purchases or gifts made by the debtor set aside as fraudulent conveyances. The rights of a particular creditor usually depend in part on the reason for which the debt is owed, and the terms of any writing memorializing the debt.
Priority of creditors
Creditor's rights deal not only with the rights of creditors against the debtor, but also with the rights of creditors against one another. Where multiple creditors claim a right to levy against a particular piece of property, or against the debtor's accounts in general, the rules governing creditor's rights determine which creditor has the strongest right to any particular relief.
Generally, creditors can be divided between those who "perfected" their interest by establishing an appropriate public record of the debt and any property claimed as collateral for it, and those who have not. Creditors may also be classed according to whether they are "in possession" of the collateral, and by whether the debt was created as a purchase money security interest. A creditor may generally ask a court to set aside a fraudulent conveyance designed to move the debtor's property or funds out of their reach.
Specialized legal practices
Attorneys who practice in the area of "creditor's rights" perform one or all of the following:
- File lawsuits and using other legal collection techniques to collect consumer debts (i.e., debts owed by individuals)
- File lawsuits and using other legal collection techniques to collect commercial debts (i.e. debts owed by businesses)
- Represent creditor's interests in a bankruptcy proceeding
- Foreclose homes or commercial real estate if the purchaser defaults on payment
- Recover (or replevin) secured goods (e.g., automobiles) if the purchaser defaults on payment
- Accounts receivable
- Bankruptcy law
- Collection agency
- Contract law
- Contribution claim (legal)
- Fair Debt Collection Practices Act