When a large loan is created, there are often items or assets set aside
as collateral. If the debtor fails to make a certain amount of payments
on the loan, the creditor may begin collecting pieces of the collateral,
usually portions of physical property, instead. It sounds like a straightforward
way of resolving debt disputes but it can actually be quite complicated,
especially when the debtor refuses to surrender the collateral property.
At this point, the creditor may use what is known as a sequestration action
to get what they are deserved by contract. The first step will be to send
a “demand letter” to the borrower of the loan. Keep in mind
that the Fair Debt Collections Practices Act (FDCPA) requires you to allow
the debtor at least 30 days to request proof of the debt’s existence
and the details defining it. Keep your records in order and this should
not be a problem.
Once the month has passed, you may begin preparing a lawsuit for collections.
A specific ‘sequestration order’ will need to be created alongside
the lawsuit, and both will be presented to a court-appointed judge. If
everything is approved, the judge will set a bond amount. Why? Well, if
you serve the writ of sequestration to the debtor that requires them to
surrender the collateral – whether it be an automobile, a home,
or something else – and they still refuse to cooperate, you can
get law enforcement involved. If they are arrested for refusing to comply
with a court order, the preset bond amount will pertain to them.
Making the Best of a Difficult Situation
There is nothing enjoyable about making a legally binding order against
a debtor who owes you money or collateral property. But sometimes it must
be done to protect your rights as a creditor and your company’s
best interests. With the help of the compassionate and knowledgeable Fort
Worth consumer collections attorneys from The Pritchard Law Firm, you
can start the process with confidence in knowing that you will not be
overstepping any legal boundaries and approaching the situation as delicately
as you can. If you would like to know more about our services, call
today and request a
free consultation with our firm.