Distraint is the seizure of property for nonpayment of debt. This practice occurs worldwide and is considered a potential remedy for creditors who are attempting to collect on debts. Regional laws about the handling of distraint vary. People who are concerned about the potential for property seizure may want to ask an attorney for assistance to determine if it is a risk in their case. Attorneys can also provide people with information on fighting property seizures.
Usually, a court order is required in order to seize property, and the debtor must be furnished with a legal notice. This notice provides information about the creditor's name, the nature of the debt, and the property being seized. The property is held until it can be auctioned. People can redeem it by paying off the debt. Distraint is separate from repossession, where property used to secure a loan is seized when the debtor falls behind on loan payments.
In rare cases, court orders are not required. Tax agencies may be permitted to act on their own authority to seize and secure property, after warning the taxpayer about the penalties for failing to get caught up on taxes. Tax representatives usually provide several opportunities for resolving the tax debt before they move to seize property, including formal legal notices sent to the taxpayer, as well as in-person meetings to discuss the tax debt.
Seizing property takes time and energy. Creditors try to avoid it, taking several steps to encourage people to pay their debt or enter a new payment plan if they cannot meet the terms of the old one. Distraint can occur when debtors fail to cooperate, there is a concern about property being hidden or removed to make it impossible to seize, or when people fail to comply with the terms of a new repayment agreement. Multiple warnings are furnished to make sure people are aware that their property is in jeopardy.
Erroneous distraint does occur, although it is rare. People who receive notices suggesting that they owe money and their property may be at risk should respond to them even if they think they do not have outstanding debts. If the matter is not addressed, it may become exacerbated and there is a risk of losing access to legal remedies by not acting. If property is seized in error, people should document the circumstances of the seizure, provide evidence of the error, and appeal to the creditor, as well as the court. Retaining an attorney can be helpful for resolving cases where property is taken by mistake.
