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Debtor-Creditor Law
by Cheryl D. Cook, O'Reilly Rancilio P.C.

Debtor-creditor law involves situations in which one party seeks to recover money owed by another party. Depending on the parties involved (individuals, corporations, banks, etc.) and the type of debt involved (consumer versus commercial loans), there will be different laws applying to the collection of such debts.

Loans made by banks and credit unions are covered by various federal and state laws which govern the operations of such federally insured institutions. In addition, there are many federal and state laws which effect consumer lending by these institutions (e.g., home mortgage financing and automobile financing).

Loans are either secured or unsecured. If a loan is secured, this means the debtor has pledged property (termed the “collateral”) for the repayment of the loan. Examples of secured loans are mortgages and automobile financing loans. With unsecured loans, there is no pledge of collateral and the lender may only seek to recover the debt from the borrower’s resources including by the obtaining of a judgment through court proceedings.