What is an interpleader action?

An interpleader action is specifically designed to resolve disputes regarding property or funds when multiple parties claim entitlement to the same asset or funds. This legal process allows a stakeholder, who holds the property or funds, to initiate a lawsuit to determine the rightful claimant among the parties involved. By doing so, the stakeholder can avoid the risk of multiple liability or conflicting judgments regarding the distribution of that property.

In contrast, other choices refer to different legal concepts. For example, joining multiple parties in a lawsuit is known as joinder, which serves a different purpose than interpleader. Challenging a previous ruling typically involves appellate procedures rather than an interpleader action, which seeks to resolve competing claims rather than reexamine decisions made by lower courts. Lastly, collecting debts is generally handled through collection actions or lawsuits, which do not directly pertain to interpleader mechanisms that specifically address ownership disputes.