Legal Definitions - grab law

Grab law refers to the various legal methods creditors use to aggressively collect debts directly from a debtor's assets or income, without the debtor having filed for federal bankruptcy protection. These methods allow creditors to seize property or funds that are not otherwise protected, often compelling payment outside of a formal bankruptcy proceeding.

Here are some examples illustrating how "grab law" applies:

• Example 1: Bank Account Levy

  A small business owes a supplier for a large shipment of goods. After numerous attempts to collect payment, the supplier sues the business and wins a court judgment for the outstanding amount. To enforce this judgment, the supplier obtains a court order allowing them to directly withdraw funds from the small business's bank account to satisfy the debt.

  This illustrates "grab law" because the supplier is directly seizing the debtor's assets (money in the bank account) through a legal process, without the debtor having initiated bankruptcy proceedings. It's an aggressive, direct collection method.

• Example 2: Seizure of Personal Property

  An individual defaults on a personal loan that was secured by their valuable antique car. The lender, having a security interest in the vehicle, obtains a court order to repossess the car. The car is then sold at auction, and the proceeds are used to pay down the outstanding loan balance.

  This is an application of "grab law" because the lender is directly taking possession of a specific asset (the antique car) belonging to the debtor to satisfy the debt. This action is taken outside of any bankruptcy filing by the individual, representing a direct and forceful collection effort.

• Example 3: Judgment Lien on Real Estate

  A former client owes a significant amount in unpaid legal fees to their attorney. After the attorney sues and obtains a judgment against the client, the attorney records a judgment lien against the client's vacation home. Years later, when the client attempts to sell the vacation home, the attorney's judgment lien must be satisfied from the sale proceeds before the client can receive their share.

  This demonstrates "grab law" because the attorney has placed a legal claim directly on the client's real estate. This lien effectively "grabs" a portion of the property's value, ensuring the debt is paid when the property is sold, all without the client having filed for bankruptcy.