PROTECT YOUR INVESTMENT
Collections generally refer to the collection of debt. There are two types of debt, secured and unsecured.
Secured debt: The borrower pledges real or personal property to secure payment of the money owed. For example, if he/she does not pay for services or material used to improve a property, the creditor can place a lien on the property as a result of the failure to pay the secured debt; if a person borrows money to purchase a vehicle and the payments are not timely made, the creditor may repossess the property and sell it to satisfy the debt.
The repossession of secured personal property usually follows the State Statutory Laws and in most states are governed by the Uniform Commercial Code. To collect a debt, the creditor may have to hire a collection attorney to make formal demands for payment or file a lawsuit.
Secured debt means that there is some real or personal property or asset as collateral that the debtor has pledged to secure payment of the loan. Secured loans are much easier to collect given that the collateral’s value is enough to cover the debt. In either case, the loan should be in writing, but unsecured debt is generally not documented.
Unsecured debt: This means there is no property pledged to secure payment as with most credit card debt, medical bills, or unsecured promissory notes. Unsecured debt collections may require more participation and strategy to obtain the unsecured debt payment.
How to collect:
If a loan is in default, the collection process is started by sending some type of default notice to the debtor. In some cases a formal demand is required before a law suit can be filed. If your demand letter is not answered within specified time period as indicated in your notice, then you can file a law suit with court system.
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