When to Call a Lawyer to Protect Your Creditor/Debtor Rights

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In times past, creditors – that is, those who lent debtor’s property or services on a promise that the obligation would be paid – held considerable power over debtors.

If a debtor failed to pay his or her obligation, there was little in the law to prevent the creditor from having the debtor thrown in jail, his or her property seized, and/or his or her family being forced or compelled to work in order to pay off the obligation. Thankfully, those days have passed: now, creditors as well as debtors both have rights they can exercise in the event a dispute
about property or services erupts. While these rights can help ensure some of these disputes are resolved quickly, sometimes a creditor/debtor attorney will need to become involved in order to ensure these rights are protected.

Typical Creditor/Debtor Rights in California

A creditor has several rights both before an obligation is formed with a debtor as well as after the debtor has broken any agreement he or she may have had with the creditor. For example, the creditor has a right to decline to extend credit to a debtor (so long as the denial is not the result of unlawful discrimination) or to extend credit on nearly any terms as the creditor may choose (for example, the creditor may not charge unlawfully-high interest rates). When the creditor has broken his or her agreement with the creditor, the creditor may pursue a lawsuit against the debtor to recover not only the principal owed but also certain interest and fees.

Debtors also enjoy certain protections under the law. For example, debtors are entitled to have the terms of the obligation explained to them before they are required to accept the obligation. When a debtor has broken an obligation, the creditor must follow certain notification procedures before attempting to collect the debt so that the debtor is assured that the debt being collected is, in fact, a valid debt. Finally, a creditor is prohibited from taking certain actions (like harassing the debtor or threatening actions which the creditor cannot legally take) while attempting to collect on the debt.

When Do I Need a California Creditor / Debtor Attorney?

An attorney’s assistance and advice can be invaluable any time you are not sure of your rights or obligations as it pertains to a credit obligation, but you will certainly want to speak with a lawyer when a problem has arisen in the creditor/debtor relationship. The sooner you involve your attorney in the situation, the quicker your dispute can be resolved (and with fewer legal missteps that can cost you money and/or time, too!).

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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