When a debtor encounters financial trouble, a creditor needs an attorney to act swiftly and diligently. Even the most diligent lenders need legal assistance with the collection of delinquent debts. The combination of swift action and a high level of sophistication allows PLDR to provide a great value to its clients. Our attorneys offer a common sense and prudent approach and weigh a variety of factors to determine the best course of action to suit the needs of any creditor. PLDR also offers its vast experience and knowledge to evaluate workout options and collect debts of any size.
Among the numerous services that PLDR utilizes to help creditors collect on delinquent debts are the following:
A workout is when a creditor and debtor seek to restructure a debt rather than force collection procedures. For instance, a creditor may offer more favorable repayment terms in exchange for additional collateral or a guaranty. Workouts can also have the desirable result of putting one creditor ahead of other creditors if the debtor later files for bankruptcy. A workout is also known as a settlement agreement.
The structuring and drafting of a security agreement or deed of trust helps protect a secured party in the event a borrower defaults on the payment obligations. After default, a secured party may utilize available remedies, such as repossession, setoff, foreclosure, and private or public sale of collateral.
A lien gives a creditor a legal right in another person's property to secure payment of a debt ahead of other creditors. Types of liens can be consensual (deed of trust on real estate or security agreement offering collateral for a loan), or non-consensual (judgment lien, mechanic's lien, or tax lien).
Virginia is a non-judicial foreclosure state. A non-judicial foreclosure occurs without a petition to the court, when a debtor defaults on a debt to a lender. The lender will turn to and sell the property which served as collateral through a deed of trust or security agreement, to satisfy the debt.
This procedure allows a creditor to seize the debtor's assets at the outset of a lawsuit and before a judgment is obtained. Typically, when a risk exists that a debtor's assets will be hidden, destroyed, sold, or moved out of state, the court may order seizure of the debtor's assets until the claim can be resolved.
An injunction is a court order either commanding or forcing a person to take a certain action. In the creditor/debtor context, an injunction may be used to prevent a debtor from hiding assets or making it more difficult for a creditor to locate assets.
To collect a debt, the creditor will first need to obtain a judgment. Then, the creditor must execute upon the judgment. A creditor's arsenal includes debtor interrogatories, wage and bank account garnishments, sheriff's sale of personal property, a creditor's suit to sell real property, among others, some of which are noted on this page.
An unlawful detainer is a proceeding by the landlord to obtain possession of real property from a person who no longer has lawful possession. A landlord can also seek unpaid rent and monetary damages for any physical damage caused by the tenant.
A voluntary or fraudulent transfer may be set aside by a court. A voluntary transfer occurs when an insolvent debtor or a debtor rendered insolvent by the transaction transfers property to a third party. A fraudulent transfer occurs when a person transfers property with the intent to delay, hinder or defraud creditors, purchasers, or other persons.
A guarantor is a person who promises to answer for the payment of a debt or performance of an obligation. Similarly, a surety is primarily liable for the payment of another's debt or the performance of another's obligation. Generally, a surety is directly liable to the creditor while a guarantor is liable only if the debtor does not meet the duties owed to the creditor.
A garnishment is a collection proceeding in which a creditor asks the court to order a third party (such as a bank) to turn over a debtor’s money or property to the creditor in satisfaction of a judgment. Garnishments can only be issued after a judgment has been entered. Bank and wage garnishment are often the most fruitful and cost efficient forms of collection.
After a debt is reduced to a judgment and the judgment order is docketed in the jurisdiction where the debtor's property is located, the creditor may ask the court to order that the debtor’s property be sold to satisfy the debt. The property may be sold if the rents and profits of the property over a 5 year period would not be sufficient to satisfy the judgment. If the rents would be sufficient to pay the debt, then the court may instead order that they be used to do so.
Once a judgment is obtained, a creditor can request the sheriff to take an inventory of the debtor's personal property and assess the fair value of the property. The creditor will be required to post a bond equal to twice the property's value. The sheriff will notify the debtor of the sale, sell the property, and pay the proceeds to the creditor (after deducting the costs of the sale).
A charging order is a statutory procedure that allows a judgment creditor to obtain a lien against a partner's interest in a partnership or a member's interest in a limited liability company. In effect, a charging order gives the judgment creditor the right to receive the debtor’s distributions from the partnership or limited liability company.
Enforcement of a judgment is necessary when the judgment debtor does not voluntarily pay the amount of the judgment. Enforcement is the broad range of collection tools discussed herein.
This procedure allows a creditor to question the debtor about his financial condition, assets, and income. This procedure coupled with a well crafted subpoena duces tecum (demand for records) can uncover a debtor's financial picture.
When dealing with a solvent debtor, a creditor can avail itself of PLDR's services to improve the speed and amount of recovery. In the event that a debtor is bankrupt, these services are utilized to place the creditor in the best position. Should a debtor file for bankruptcy, PLDR’s bankruptcy section can assist a creditor through the process and in protecting the creditor’s interests.
