Creditor protection refers to laws that protect both the creditor and borrower in case of payment defaults. These laws are referred to as creditor protection.
Creditor protection protects defaulted borrowers from creditors. Such protection allows debtors to retain control of enough possessions to maintain a basic standard of living, even if they lose the lawsuit. The creditor has no right to seize all of the debtor’s property. However, this doesn’t mean that the government will not require the debtor to pay the creditor. Payment in cases like these usually takes the form of regular salary deduction until the amount owed is fully paid.
Insurance creditor protection, on the other hand, protects the creditor in case the borrower dies or becomes totally disabled, and so becomes unable to pay the borrowed amount before it is fully paid. The outstanding debt is paid by the creditor’s insurance company. This ensures the creditor doesn’t lose money. It also leaves the borrower’s family with no debt to worry about.
