Legal Definitions - factorizing process

The factorizing process is a legal procedure that allows a creditor to collect a debt by seizing assets belonging to the debtor, but which are currently held by a third party. Instead of directly taking property from the debtor, the creditor uses this process to compel the third party to turn over the debtor's assets or funds. This procedure is more commonly known as garnishment, and is also sometimes referred to as trustee process or process by foreign attachment.

Here are some examples to illustrate how the factorizing process works:

• Wage Garnishment: Imagine a situation where a credit card company (the creditor) has obtained a court judgment against David (the debtor) for unpaid credit card bills. David works for "Tech Solutions Inc." (the third party). Through the factorizing process, the credit card company can obtain a court order directing Tech Solutions Inc. to withhold a portion of David's regular paycheck and send it directly to the credit card company until the debt is satisfied. In this scenario, Tech Solutions Inc. is the "factor" holding David's wages, and the factorizing process compels them to divert those funds to the creditor.

• Bank Account Garnishment: Consider a small business owner, Maria (the debtor), who owes money to a supplier (the creditor) for materials. After the supplier wins a lawsuit against Maria for the unpaid amount, they discover Maria has funds in an account at "City Bank" (the third party). The supplier can initiate a factorizing process against Maria's bank account. The court would then order City Bank to freeze a specific amount of Maria's funds and transfer them directly to the supplier to cover the debt. Here, City Bank acts as the third party holding Maria's assets, and the factorizing process ensures those assets are used to pay the creditor.

• Funds Owed by a Client: Let's say a freelance graphic designer, Emily (the debtor), owes a significant amount of back taxes to the government (the creditor). Emily has recently completed a large project for "Global Marketing Agency" (the third party), which owes Emily a substantial payment for her services. The government, using the factorizing process, can obtain a court order directing Global Marketing Agency to pay the money it owes to Emily directly to the government, up to the amount of the tax debt, instead of paying Emily. Global Marketing Agency is the third party holding funds that are due to the debtor, and the factorizing process diverts these funds to the creditor.