The commercial collection of secured property is an effort to collect secured property that is at the heart of a commercial debt. The property may be the originating factor of the debt (such as a commercial vehicle) or it may be collateral used to secure a debt (such as a loan).
Creditors Have the Legal Right to Collect Secured Property
Creditors have the legal right to collect secured property if the debtor doesn’t make their payments. On that note, it is critical that the creditor understands what it is in their contract and follows its terms as well as the law when taking possession of the secured property. An experienced collections attorney can help guide you through this process.
What Happens If the Debtor Files Bankruptcy?
When a debtor files bankruptcy, secured transactions take priority over unsecured transactions. For secured creditors, this means that if there is any money that will be paid out to creditors, the secured creditors will get paid first. They may not get paid everything that they’re owed, but they will still receive something if there is money to distribute.
Court Remedies for Commercial Collections of Secured Property
In addition to filing a lien and repossessing the collateral, creditors can petition the court to get help. The remedies that are available depend on the type of debt and whether there is a risk that the property will be destroyed or if it will disappear. A commercial collections attorney can help you determine if going to court to retrieve your secured property or to get a judgment or garnishment for the difference between the collateral’s worth and what is owed to you is your best option.
What Happens If the Debtor Leaves the State?
If the debtor leaves the state, you can still collect the secured property. However, it may cost you more in both money and resources to do so. You may be able to recover those costs through court if you sue the debtor.
For more information on debt collection best practices, contact commercial collections attorney Ronald P. Slates today.
