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Can a Debt Recovery Company Garnish Your Home for Your Unpaid Unsecured Debt?

April 12, 2012 | Comments: 0 | Views: 155

Debts can be a secured debt kind where a security is used to guarantee the debt, and the other is an unsecured debt where there is no security or guarantee. The guarantee for the secured debt can be your house or car which will form as chattel and will be taken by the creditor in case there are no payments made for the debt. For the unsecured debt, there is no chattel and what will only be binding will be the debt agreement duly acknowledged by the person who acquired the debt or loan. This will be the binding agreement in case lawsuits will be filed if no payments are made.

For unsecured debts, the creditors will have no rights to your assets because these are not your guarantees. If you are delinquent in your debt payments they cannot outright take the assets from you. However, creditors still can have other options if you are not paying your debts. They can turn over the debt to collection agencies that will step up the collection efforts through repeated calls or send collection and demand letters. They can even pursue to the ultimate, which is to file lawsuits if despite all the collection efforts done, still the person will not pay.

In case of lawsuits and judgment made on the case, the collection agencies can garnish wages or assets, like your home, depending on the judgment made. However, this may not be true in all countries or states because there are some who have laws that are more protective and favorable to consumers, like in some states in the US. For the collection agencies therefore, it is most viable for them to check first on the laws of the place they want to garnish homes of debtors with unpaid debts. Having settlement agreements may be the better option, and not to doing the extremes.

Common unsecured loans or debts are credit card debts with no securities made as guarantees to secure these. Typically when these debts are uncollected the credit card companies will pass on the debts to collection agencies and they will be the ones to pester the debtors with collection moves. When the debts are really established and still no payments are made, these agencies can then start moves or legal actions. When judgments are made it will be possible that your home, other assets, or your salaries will be garnished in order to satisfy the debt you incurred, including other charges, depending on the court.

Thus, for debtors it will also be unwise to not exert efforts to pay. In the first place it is your debt in any case, and it will be to your advantage to make settlements, in order not to compromise your home or your wages and this you have to do fast. Before things get more complicated it will be wiser to settle for an agreement with the collection agency concerned. Make settlements that will be fair to your pocket and also one that you can regularly fulfill.

Jim Oneil is a writer with a special interest in debt issues and personal finance. He has written for small local newspapers in the past and now devotes part of his time writing about debt consolidation and other UK based financial products.

Source: EzineArticles
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