Our lawyers assist businesses and individuals in debt collection matters in Texas and Oklahoma. Below is a brief overview of the debt collection process.
Overview of the Debt Collection Process
The remedies available to a creditor depends on many factors. Some of the biggest factors include whether the debt is secured or unsecured, whether the debt incurred on a government project, whether the creditor is entitled to a mechanic’s and materialman’s lien, and whether or not the creditor has already received a judgment.
If the debt is unsecured (no collateral or lien), the creditor is limited on what they can do. Typically, the creditor will be forced to file a lawsuit against the debtor and, where applicable, against the guarantors. The debt collection process will start with a demand letter demanding payment for the unpaid obligation. If the debtor does not pay the debt after the demand letter, a lawsuit is typically the next step unless the creditor has a lien or lien rights.
If the obligation owed to the creditor is secured with collateral, the creditor can generally (1) repossess the collateral or foreclose the lien and/or (2) seek a judgment. Typically, a foreclosure will occur first and a lawsuit is only necessary if the foreclosure sale proceeds are less than the debt. If you are a secured creditor, our lawyers can help you foreclose a lien and pursue the deficiency judgment, if necessary.