Best Creditor Lawyers in Patna

About Creditor Law in Patna, India

In Patna, as the rest of India, creditor law covers the scope of the rights and responsibilities of people and entities that lend money or extend credit. These individuals or organizations, classed as creditors, can lend money or credit to both individuals and organizations, known as debtors. This legal area also incorporates laws and regulations over secured and unsecured debts, insolvency proceedings, enforcement actions, and the rights and obligations of both creditors and debtors.

Why You May Need a Lawyer

There are multiple situations where legal advice in creditor law may be necessary. If a debtor cannot repay the loan and has defaulted, the creditor has the right to initiate a debt recovery process. In this process, legal help is often necessary to understand debt recovery laws, handle negotiations, initiate legal proceedings if required, and ensure that the rights of the creditor are protected throughout.

On the other hand, creditors might face situations where a debtor has become insolvent or has declared bankruptcy, rendering their debts practically unpayable. Here, an attorney well-versed in creditor law can assist with filing a claim in the debtor's bankruptcy or insolvency proceedings and navigating the legal complexities involved in recovering the outstanding dues.

Local Laws Overview

The key aspects of creditor law in Patna followed are aligned with the legal structure across India, governed by the Insolvency and Bankruptcy Code (IBC) 2016, SARFAESI Act 2002, and the Indian Contract Act 1872 amongst other legislation. For instance, under the IBC, creditors can initiate insolvency resolution processes if the amount of the default is over one crore rupees. SARFAESI Act empowers Banks/Financial Institutions to recover non-performing assets without the intervention of the Court. The Contract Act comes into play in outlining the responsibilities and obligations of the debtor and creditor while entering into an agreement.

Frequently Asked Questions

1. What is a secured creditor?

A secured creditor is one who extends a loan against some form of collateral or security. In the event of a default, secured creditors have a preferential claim and can seize and sell off the asset for debt recovery.

2. Can a creditor initiate insolvency against a debtor?

Yes, under the Insolvency and Bankruptcy Code (IBC) 2016, creditors - both secured and unsecured - can initiate the insolvency resolution process against a debtor under certain conditions.

3. How does the SARFAESI Act assist creditors?

The SARFAESI Act empowers Banks/Financial Institutions to recover non-performing assets without the intervention of the court. It gives powers to the Banks to seize the assets and manage the same.

4. How is the debtor-creditor relationship legally governed?

The debtor-creditor relationship is primarily governed by the Contract Act 1872, which enlists the responsibilities and obligations of both parties during the entry of an agreement.

5. What is the process to recover debts from an insolvent debtor?

If a debtor becomes insolvent, creditors can file a claim in the debtor's insolvency proceedings. The resolution professional then consolidates all claims and follows a process to try and repay the creditors.

6. Can a creditor sell a debtor's property in case of a default?

Only secured creditors, who have extended debt against certain collateral, can seize and sell the debtor's property in case of default, under the terms of the debt agreement and applicable laws.

7. Are there any statutory limits on the rate of interest a creditor can charge?

The rate of interest charged by a creditor must comply with the provisions of the loan agreement as well as guidelines and directives issued by the Reserve Bank of India from time to time.

8. Can foreign creditors file an insolvency petition in India?

Under the Insolvency and Bankruptcy Code (IBC) 2016, foreign creditors are treated on an equal footing with domestic creditors and can initiate insolvency proceedings in India.

9. What actions can affect the priority of a creditor’s claim during insolvency?

The IBC dictates the order of priority for settling claims during insolvency, which takes into consideration the type of creditor - secured or unsecured, workmen's dues, and employee salaries, amongst others.

10. What is the difference between operational and financial creditors under the IBC?

Financial creditors are those whose relationship with the entity is purely of financial nature, such as loans, debt securities etc. Operational creditors are those whose liabilities from the entity originate from transactions on operations.

Additional Resources

For more details on legal provisions surrounding creditors, individuals can refer to the Insolvency and Bankruptcy Code (IBC), 2016, SARFAESI Act, 2002, and the Indian Contract Act, 1872. The Reserve Bank of India's website provides guidelines and regulatory norms concerning debt recovery. The National Company Law Tribunal (NCLT) handles insolvency and company dispute matters and can be a valuable resource as well.

Next Steps

Should you require legal advice or assistance in matters related to creditor law, it is advisable to approach a legal practitioner with expertise in this field. Lawyers specializing in creditor law can provide insights specific to your case, assist you in understanding your legal rights and obligations, help negotiate settlements, and guide you through debt recovery, insolvency proceedings, or other processes guided by the creditor law.