These days, debt has become a common phenomenon.
Most of us are in debt of one kind or another; the credit crunch has had its effects on everyone.
The excessive use of credit cards, taking on too much loans and high mortgage payments are some of the common reasons of debt, and for many people, repayment becomes a problem.
Creditors are the individuals or organizations who you owe money to.
They are the people who have extended credit or loans to you for a specified period of time.
When you are approved for a loan or a credit, the contract agreement specifies the exact time by which you must make the repayment.
If you are unable to do so within that time period, your creditors have complete rights to take a legal action against you.
There are many kinds of legal actions that the creditors can take to ensure that they get their money back.
If the amount of money is small, the creditor can file a "small claim" in the court.
It is a relatively inexpensive and simple means for the creditors to get repayment.
Once a claim is registered, you receive a summons to the court, and if you pay your debt at that time, the matter can be ended there and then.
But if you do not pay the money back, the matter is negotiated by the court and you may face legal action.
If the amount of money is larger than three thousand pounds, you will have to hire a barrister or solicitor to represent you in court.
In the same way, the court will reach a verdict about how you will pay back the debt.
If you do not have enough money to pay back the debt till a specified date, you are declared bankrupt and the creditors get the ownership of your property and belongings.
This means that the creditors can take over your home and your assets, and can sell them off to recover their loan.
Another action that a creditor can take is to hire a collections agency which can act as an intermediary between you and the creditor.
It is the responsibility of the agency to recover the money of the creditor.
If you are unable to pay by the specified date, a lawsuit can be filed against you in the court, and you may be called for a hearing and proceedings.
One thing to keep in mind, however, is that taking legal action is the last resort for a creditor.
Filing a lawsuit and hiring lawyers and agents is costly, and most creditors try to avoid it.
It is better for them if they negotiate a deal with the debtor or give him some more time because even if they go through all the court proceedings, they will receive the same amount of money they are owed, in the end.
If you are in a debt and find it difficult to repay, it is better to negotiate some terms with your creditors and find a way out.
You could also take help from a debt management company who can advise you about your options.