In the process of debt collection litigation, it is important for debtors to protect their interests and ensure that they can recover the debts owed to them. One way to achieve this is through implementing various protective measures called "preservation measures" or "precautionary measures". These measures are designed to prevent the debtor from hiding or disposing of assets, ensuring that there will be sufficient assets for compensation in case of a successful lawsuit. In this article, we will discuss some common preservation measures used in debt collection litigation.
A freezing order, also known as a Mareva injunction, is a court order that prevents the defendant from disposing of, dealing with, or transferring any of their assets. This measure is commonly used when there is a risk that the debtor might dissipate their assets to avoid paying the debt. A freezing order can be applied to both movable and immovable assets, ensuring that the debtor's assets remain intact until the lawsuit is resolved.
If the debtor has tangible assets such as real estate, vehicles, or valuable personal belongings, a seizure and sale order can be obtained. This order allows the creditor to seize and sell these assets to recover the debt. The court may appoint an independent receiver to manage the sale process and ensure fair distribution of the proceeds among the creditors.
If the debt is owed by a company or business entity, the court may appoint a receiver to take control of its assets and manage its affairs. The receiver acts as an agent for the court and works towards maximizing the recovery for the creditors. They have the power to collect and distribute the company's assets, negotiate settlements, or even initiate legal proceedings on behalf of the company.
A prohibitory injunction is a court order that restrains the debtor from taking certain actions that may be detrimental to the creditor's interests. For example, it can prohibit the debtor from moving funds out of a bank account, selling specific assets, or entering into contracts that might affect the recovery of the debt. Prohibitory injunctions are used to maintain the status quo until the debt dispute is resolved.
In some cases, the debtor might hide or manipulate their financial information to evade debt collection. An information disclosure order requires the debtor to disclose detailed financial information, including bank statements, tax records, and other relevant documents. This measure helps the creditor to have a clear understanding of the debtor's financial situation and ensures that all assets are accounted for.
When engaging in debt collection litigation, utilizing protective measures such as freezing orders, seizure and sale orders, appointment of receivers, prohibitory injunctions, and information disclosure orders can greatly enhance the chances of successful debt recovery. These measures are designed to safeguard the interests of the creditors and ensure fair compensation for the debts owed. It is important for debtors to seek professional legal advice to determine which preservation measures are suitable for their specific case.
