Using appointment of receivers as a means of debt collection

Using appointment of receivers as a means of debt collection

| Jan 18, 2021 | Collections

When a debtor will not make a payment on a balance he or she owes, it can leave a creditor in a precarious financial situation. It is essential to collect money owed, and it is appropriate to take legal steps when a debtor will not fulfill his or her financial obligations. There are various collection methods available by which a California company or individual can secure payment, and one of these is called appointment of receivers.

In this process, the creditor or its representatives take over the debtor’s business. This allows the creditor to take all profits and income the business receives as payment on the unpaid debt. In the appointment of receivers, the business owner is actually displaced, and the receiver takes over all operations. The receiver will work to make the business as profitable as possible, as well as ensuring the following:

  • Make certain that all profits are paid to the creditor
  • Recover any property transferred in an attempt to avoid it going to the creditor
  • Sell property or liquidate assets in order to pay off debt
  • Grant access to all of a business’ books and accounts to find money that could be used as payment

Appointment of receivers is only one method of debt collection available. It requires a court order to initiate this process. Because it is a rather extreme method by which to collect payment, it is often considered the last resort.

If a California business or individual is considering debt collection methods, it may be beneficial to consider appointment of receivers. There are other options available, and an assessment of the individual situation will determine which is the right approach to collecting debt. The first step may be to discuss the situation an experienced debt collection attorney.