creditor's rights

Creditor’s rights can refer to many different aspects of creditor-debtor and creditor-creditor relations including a creditor’s rights to place a lien on a debtor’s property, garnish a debtor’s wages, set aside a fraudulent conveyance, and contact the debtor and relatives. Usually, creditor’s rights refers to what creditors can do to get back money owed to them and their positioning to other creditors of the debtor. Federal and state laws such as the Fair Debt Collection Practices Act (FDCPA) restrict the ways in which creditors may attempt to collect debts. If creditors resort to suing for the return of debt, there are a variety of rules that apply especially where there are multiple creditors in exercising their rights to collect debt. 

While there are endless variations and specific rules on the topic, generally a creditor’s rights to regain debt will depend on what kind of debt exists. If the debt was a secured debt, the creditor will be able to regain the item securing the debt, often without rights to other assets of the debtor. On the other hand, unsecured creditors must try to secure their repayment through suing the debtor generally. If the debtor is under bankruptcy, unsecured creditors rank below secured creditors in order of who gets paid. Creditor’s rights often vary depending on whether or not the debtor is in bankruptcy with more specific rules governing which creditors get paid, how, and in what order. 

[Last updated in February of 2022 by the Wex Definitions Team]