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Collections Law

The legal scope of collections fall under debtor-creditor law, which governs situations in which one party is unable to provide payment for a debt to another. The process of collections refers to the pulled debit payment of a creditor. Commonly, a collection agency is an organization that seeks payment on debts owed by people or commercial entities. Most collection agencies typically operate as creditor agents and pursue the collection of debts for a fee or commission of the amount of debt owed.

Creditors use judicial and statutory processes to have debts satisfied. Attachment is a limited statutory remedy whereby a creditor has the property of a debtor seized to satisfy a debt. Garnishment allows a creditor to collect part of a debt (for example wages) to satisfy the obligation. Replevin allows a creditor to seize goods, such as a security interest, that he or she has a property interest in, to satisfy the debt. Receivership involves the appointing of a third party by a court to dispose of the debtor’s property in order to satisfy the debt.

A debtor may attempt to fraudulently convey a piece of property to keep it out of the creditos’ hands. Laws seek to prevent this type of property transfer. 

Laws vary by state and country, governing the time in which a person or entity can file suit to collect a debt. Depending on the law and whether the debt is the result of a written contract, oral contract, open account,or promissory note, a creditor or debt collector gives up his right to file suit to collect a debt after a certain time period. Local laws should be consulted for specific requirements in your area.