Legally, any debt incurred must be paid. This is generally not a legal issue in itself. The law becomes involved only when the debtor cannot or will not pay the debt. Therefore, "legal debt" issues concern those remedies that exist by law that make it easy for creditors to take back at least some of their money from a troublesome borrower.
Liens and Interest
A lien is a legal remedy against borrowers who cannot pay their debts. Liens are governed by state law and usually are overseen by the court system. The purpose is to sell a debtor's property so a debt can be satisfied. Once certain types of property have been liquidated -- some property is exempt, such as the debtor's primary residence -- the courts must sort out who gets the money. The legal doctrine of "priority interest" means that certain creditors get paid off before others. In federal law, the federal government gets paid first in any lien action if there are federal debts, such as tax debts or student loans.
Attachments
According to the Cornell University School of Law, an attachment is also a form of debt collection that is done through the court system. An attachment is similar to a lien in that the court decrees that certain properties can be seized by a creditor in order to satisfy a debt. While a lien is a legislative action differing by state, an attachment is a judicial decree. One of the purposes of an attachment is to keep debtors from shifting assets. The Uniform Fraudulent Transfer Act is designed to empower courts to quickly attach property that is likely to be sent overseas or transferred to another name in order to keep it from getting attached.
Garnishments
A garnishment is a legal remedy for debt collectors that does not seize property per se, but rather uses money owed to the debtor to be paid to the creditor rather than the debtor. In general, this legal weapon is used to take wages due to a defendant and send them to a creditor, such as a family to which the debtor owes child support.
"In Rem" Cases
"In Rem" literally means a court case "against the thing," that is, the property rather than the person who owes it. In some cases, debts are owed to people over whom the courts have no jurisdiction. If you contract a debt from someone who is not an American citizen, but who owns property in the United States, then the court can engage in an In Rem case. This means that property is considered an "American" where the owner is not. The case is then directed against the property rather than the owner. Another example here is if the "owner" of the property is a minor who has this property in a certain trust account overseen by a trustee. The account would be considered the object of the action, since the minor cannot engage in legal contracts.
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