Unsecured Debtor/Creditor Claims
As an individual or part of a business, you may have lent money to another person or business, and for whatever reason, they have not paid you back. What are your options?
It first depends on the claim. If the claim is a mortgage or another type of lien, you could look to bring about a foreclosure. If the interest is secured by some other collateral, you could pursue that collateral. All other kinds of debt are known as unsecured debt, and for these you must bring a debtor/creditor claim.
Unsecured debtor/creditor actions fall into two distinct categories: commercial claims and consumer debt.
Commercial claims arise out of debts incurred in pursuit of a business venture. They are typically larger than debts owned by individuals and, unless the business is ceasing operations or insolvent, are usually easier to pursue. They also are not subject to a lot of the protections in law granted to individual debtors.
Our firm has extensive knowledge and experience with negotiating with businesses to obtain swift results to recover your money if the debtor again fails to pay.
The other kind of debtor/creditor actions are consumer debt claims, which arise out of debts owed by individuals. These debts are not for business uses, but for personal, family or household purposes. These debts are subject to significant protection and regulation in order to protect the individual debtor. Specifically, the Fair Debt Collection Practices Act regulates and restricts the collection of consumer debts.
In pursuing a claim against individual debtors, there are certain types of property that can never be touched by creditors. Generally, these are personal and homestead items. Further, certain sources of income are exempt from being used to satisfy debts. Some of these include:
- Supplemental security income, (SSI);
- Social security;
- Public assistance (welfare);
- Spousal support, maintenance (alimony) or child support;
- Unemployment benefits;
- Disability benefits;
- Workers’ compensation benefits;
- Public or private pensions;
- Veterans benefits;
- Ninety percent of wages or salary earned in the prior 60 days;
- $2,500 of any bank account containing statutorily exempt payments that were deposited within the prior 45 days;
- Railroad retirement; and
- Black lung benefits.
There is also a homestead exemption up to a certain sum which varies by county.
We can assist you in successfully negotiating for the repayment of commercial and consumer debt, and to bring an action in the event the debtor does not cooperate.
Means Of Collecting On A Debt
Once you have a judgment on your debt, what is the next step? A creditor has several means to learn about and then reach the resources of the debtor, such as:
- An Information Subpoena, which is an order signed by a court clerk or an attorney and served on the debtor or an employer, a landlord or bank. The party must then answer questions about where the Debtor’s assets are located;
- A Restraining Notice, which is an order signed by a court clerk or an attorney and served on a bank to stop the debtor from withdrawing money. A restraining notice can also be used to prevent someone who owes money to the debtor from paying it to the debtor until the debt is paid to the creditor;
- An Attachment, which is a court-order that seizes specific property to satisfy a debt;
- Garnishment, which is an order for a third-party (usually an employer) to pay that money directly to the creditor;
- Replevin, which is an order that allows a creditor to seize goods, such as a security interest, that they have a property interest in, in order to satisfy the debt; and/or
- Receivership, which is the appointment of a person by a court to dispose of the debtor’s property in order to satisfy the debt.
In certain kinds of cases, a creditor may also be able to get the debtor’s driver’s license or professional or business license suspended until the judgment is paid.
Uniform Voidable Transactions Act
Of course, a debtor may attempt to hide assets, so recent transactions, especially to friends and family, should be carefully studied and can be voided. Any conveyance is against the law if a debtor transfers property or takes on an obligation that was either (a) transferred or incurred with actual intent to delay or defraud creditors or (b) was made by an insolvent transferor in exchange for less than reasonably equivalent value.
New York’s Uniform Voidable Transactions Act was updated in April 2020 with significant changes, including reducing the time to bring an action. If you believe you have a claim, we can assist with successfully collecting on your debt in a timely manner.
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