What Do Debtor-Creditor Attorneys Do?

Debtor-creditor laws help consumers and businesses:

• Navigate disputes
• Avoid illegal collection tactics
• Manage repayment without immediately resorting to bankruptcy

Debtor-creditor lawyers help debtor clients stay out of bankruptcy court. They also help business owners handle repayment issues before they escalate into lawsuits.

An attorney practicing debtor-creditor law may specialize in small business or consumer issues, helping clients manage debt. They advise on several issues, including:

• The proper procedures for extending credit
• Consumers’ rights regarding debt collection
• Forms of credit satisfaction

Keep reading to learn more about debtor-creditor law and how attorneys in this field support their clients. Bankruptcy is a separate practice area. To file for bankruptcy, you’ll want to use a bankruptcy attorney. 

Debtor-Creditor Law: Consumer

Some consumer debt issues may not need legal representation. Small claims court handles minor disputes. If you have trouble with debt collectors over a small bill, small claims courts are a good place to settle the matter. Judges and mediators can help resolve these issues by arranging a payment plan with the consent of the original creditor.

More serious problems may need legal services. Suppose a debt collection agency notifies you that they are filing a claim against you for failure to pay your auto loan. If you default on a debt collection lawsuit, meaning you don’t file the correct paperwork, the collection agency can repossess your car.

The Equal Credit Opportunity Act (ECOA) is a federal law that ensures that all consumers have equal ability to apply for credit. Agencies extending credit can’t turn you down because of your race, religion, gender, or other protected characteristic. If you believe this has happened, contact an attorney at once.

Attorneys can help with credit card debt by contacting your lender on your behalf to arrange repayment plans.

Debtor-Creditor Law: Business

Business owners must follow the Fair Debt Collection Practices Act (FDCPA). The FDCPA is a federal law, but most states have similar laws that resemble the FDCPA. These laws apply to any business that extends or accepts credit. The laws regulate how businesses and debt collectors may try to collect on past-due accounts before starting legal action. The FDCPA and state laws:

• Define how businesses can make phone calls, send letters or emails, or otherwise contact the debtor
• Limit contact to third parties when trying to collect on a debt
• Prevent creditors from harassing debtors, making false statements, or using unfair practices to collect a debt

Debt collectors can’t garnish wages until after they get a judgment, collect more than the amount of the debt, or tell debtors they will go to jail. Creditors can’t seize debtors’ property or say they will do so unless they actually intend to file a creditor’s lawsuit.

Get Legal Advice From a Debtor-Creditor Attorney

You need legal help if you have issues with debt collections or other debtor-creditor matters. A lawyer in your area can explain your options and help plan a clear path forward to negotiate with creditors and prevent further legal or financial consequences.

Because your state’s laws are relevant, your attorney should be licensed in your state. FindLaw’s directory of debtor-creditor lawyers can get you started. Enter your city or ZIP code for a list of qualified legal advisors. Many law offices offer free case evaluations.

Debtor-Creditor Terms To Know

The following terms are often used when discussing debtor-creditor law. 

• Contingent claim: A claim the debtor owes in certain circumstances. A “contingency” is something that must happen before the debtor must pay the debt.
• Creditor: A person who lends money or provides goods or services. The debtor owes money to the creditor.
• Secured debt: Debt backed by a mortgage or other collateral. The creditor can collect on the secured property if the debtor defaults. Examples include home mortgages, auto loans, and tax liens.

For more legal definitions, see FindLaw’s Glossary of Common Bankruptcy Terms.

Related Practice Areas

Debtor-creditor law often overlaps with the following legal areas:

• Bankruptcy Law
• Consumer Law
• Business and Commercial Law
• Taxation Law