When to Hire an Attorney for Your California Creditor-Debtor Rights Dispute

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Creditor-debtor rights disputes can place a small business in a precarious situation.

When the small business is in the position of the creditor, disputes with debtors can mean that the business is not able to obtain payment from the individuals and entities that owe the business money. When the small business is in the position of the debtor, the actions of creditors can deprive the small business of its monetary and other assets. In either scenario, the small business owner
may find it difficult – or impossible – to continue on with business operations. Small business owners can greatly benefit from knowing the rights they possess as creditors and debtors, and when a California small business attorney’s assistance is necessary.

Rights of Creditors in California
A creditor – that is, a person or entity to whom an obligation is owed – has certain rights against debtors in California. Some of these rights may be exercised even if the debtor files for bankruptcy protection. These rights can include:

-The right to file a lawsuit and seek the garnishment of the debtor’s wages or attachment of the debtor’s assets and/or bank account(s);
-The right to challenge the “automatic stay” that goes into effect when a debtor files bankruptcy; and/or
-The right to contest the discharge of the creditor’s debt through bankruptcy.

Creditors who have had trouble obtaining timely payments from debtors should act quickly to exercise their rights. It is generally advisable to consult with a creditors’ rights attorney as soon as you have reason to believe that a debtor will not pay according to the terms of the agreement between the debtor and the creditor.

Rights of Debtors in California
Debtors also have rights that protect them from unfair and abusive collection practices and afford them the opportunity to have certain obligations discharged through bankruptcy. Like creditors’ rights, debtors must typically act quickly in order to exercise these rights and obtain the maximum benefit from doing so. Debtors’ rights include:
-The right to ask for verification of debts from debt collectors;
-The right to be free from abusive or harassing debt collection practices;
-The right to have a judge determine whether you owe a debt before a creditor can seize your bank account, garnish your wages, or take other actions to recover money and/or tangible assets from you.

James H. (Jim) Gulseth was born and attended high school in Devils Lake, North Dakota and graduated with an A.B. degree from the University of California at Berkeley. He earned his JD degree at the University of California Hastings School of Law in San Francisco. He is a member of the Corporations, Business Transactions, Securities and Tax and Intellectual Property Sections of the State Bar of California and is a member of the State Bar of California, the Alameda County Bar Association, and a member and past President of the Eastern Alameda County Bar Association.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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