Perhaps a California business owner has attempted to receive payment from a customer by sending additional invoices and making calls, but to no avail. It has now reached the point where debt collection efforts need to become more formal. Before embarking on a particular course of action, it would help to know whether the debt is secured or unsecured.
As the name implies, some asset “secures” a secured debt. Whatever the property is, it serves as collateral for the purchase. Vehicles and homes are the most often seen pieces of property that secure the debt on them. The lien created in this scenario gives a California business the possibility of repossessing or foreclosing on the property if the debtor fails to make the agreed upon payments and meets other conditions.
On the other hand, unsecured debts do not have any collateral attached to them. In contrast to secured debt, collecting an unsecured one will require receiving permission from the court to take actions to collect the debt. For instance, a business owner could request a garnishment, a lien or some other legal remedy to help collect the debt.
Since the method may differ based upon whether debt collection efforts will be for a secured or unsecured debt, it would be wise to make sure there is a clear understanding of the legal options available. Moreover, working with an attorney experienced in collecting consumer debts could prove invaluable. Federal and California laws require certain actions under these circumstances and failing to comply could prove costly.