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3 ways the civil courts can help creditors recover unpaid debts

On Behalf of | Feb 16, 2024 | Business Law

Attempting to collect on a debt is often a very frustrating process. Certain people may go to great lengths in their efforts to avoid their financial responsibilities. Businesses might find that someone stops answering phone calls when they commence collection efforts. There’s also a possibility that someone might reject their mail or even move to try to avoid or delay collection efforts.

Creditors who cannot convince someone to make good on their financial obligations voluntarily often need to take the matter to court. The Texas civil courts have the authority to uphold a debt and issue a judgment in favor of a creditor. A company that secures a debt-related judgment may have several different options for converting that judgment to actual repayments of the debt owed. The following are three of the ways that a collections-related lawsuit might culminate in the repayment of financial obligations.

A real property lien

Someone who owns their own home may feel as though they don’t need to worry about their credit anymore. They may not care if they have numerous accounts showing past-due status on their credit report or lenders trying to take them to court for failing to make payments. However, their home can potentially serve as a source of leverage for frustrated creditors. A debt-related judgment can sometimes lead to a lien against real property. The debtor could then need to pay the creditor in full before they can transfer the title to someone else or move forward with a refinancing attempt.

A levy against property

The law in Texas authorizes judges to grant a levy against personal property, such as bank accounts. A levy allows a creditor to lay claim to certain resources, including the balance in someone’s financial accounts. Levies can lead to a  lump-sum payment in some cases if creditors can identify resources worth a significant amount.

Garnishment of someone’s wages

When someone doesn’t own their own home or much valuable property, creditors may need to look at their income instead. Texas law permits the garnishment of someone’s wages to force the repayment of certain financial obligations. Wage garnishment can lead to a slow but steady stream of revenue for a creditor who cannot convince a debtor to make voluntary payments.

Although it can take months to complete the process, many creditors frustrated by less aggressive collection efforts may find that a collections-related lawsuit is the best option for securing repayment. Initiating a lawsuit against a recalcitrant debtor can lead to numerous viable solutions for an unpaid debt.