Secured Transaction

Question 1

Credit

Answer 1

transaction in which goods are sold, services are rendered, or money is loaned in exchange for a promise to repay the debt at some future date

Question 2

Unsecured Credit

Answer 2

a service was rendered or good sold and the consumer or debtor promises to pay for the service or good later

Question 3

Examples of Unsecured Credit

Answer 3

ordering food at a restaurant

Question 4

If debtor doesn’t pay what can the creditor do?

Answer 4

send notices to pay

Question 5

Can the creditor just go pick up the property for which debtor still owes money?

Answer 5

No, that’s criminal and civil conversion

Question 6

Instead, sue debtor for breach of contract, then what?

Answer 6

once an unsecured creditor has a judgement, the creditor may seek judicial remedies such as, attachment or garnishment

Question 7

Attachment

Answer 7

seize debtor’s stuff (assets, bank accounts)

Question 8

Garnishment

Answer 8

make employer pay creditor part of debtor’s wages

Question 9

A debt is secured if it is backed either:

Answer 9

• by a pledge of another persons to pay OR
• by a putting something up to collateral

Question 9

Secured Credit Transaction

Answer 9

the creditor makes some contract to give the creditor some security that the debt will actually be repaid

Question 10

Surety/Guarantor

Answer 10

a person who agrees to be liable for the debt of someone else (must be written)

Question 11

Artisan’s Lien

Answer 11

if you fix something for a customer, and your customer didn’t pay, you can hold onto it until they do

Question 12

Two Elements of Artisan’s Lien

Answer 12

• possession: by provider of services or goods
• a debt created by the improvement to goods or provision of services concerning the goods

Question 13

Foreclosing the Lien

Answer 13

allow the lienholder to take/sell the collateral to satisfy the debt after a period of time is debtor fails to pay

Question 14

Security Interest

Answer 14

an interest in personal property obtained by a creditor to secure payment or performance of obligation

Question 15

Collateral

Answer 15

the property that secures the loan anything

Question 16

Creditor Claims

Answer 16

to participate in the estate of a bankruptcy debtor, credits must file a proof of claim within a certain, usually 90 days after first meeting

Question 17

Secured Claim

Answer 17

the collateral is worth the same as the amount of debt owed

Question 18

Undersecured Claim

Answer 18

the collateral is worth less than the amount of debt owed, the the debt is reduced by the amount of collateral exchanged
*what is left is unsecured debt

Question 19

Oversecured Claim

Answer 19

the collateral is worth more than the debt owed

Question 20

Waterfall System

Answer 20

secured creditors, then priority unsecured creditors, then unsecured creditors, etc
*only when all the secured creditors are paid in full, then priority unsecured creditors get paid.

Question 21

1. Secured Creditors

Answer 21

creditors who have a lien on some form of the debtor’s property. they either get the collateral itself or value of collateral in cash

Question 22

2. Priority unsecured claims

Answer 22

debt that isn’t backed by collateral, but policy has decided some claims are more important than others

Question 23

Priority unsecured claims

Answer 23

• Domestic support obligations
• Unpaid contributions to employee benefit plains
• claims for death or personal injury from a DUI

Question 24

3. Unsecured Creditors

Answer 24

paid pro rata (as a percent), they share what is leftover

Question 25

What if there is something left over after everyone has been paid?

Answer 25

it goes back to the debtor

Question 26

Discharge from bankruptcy

Answer 26

the debtor’s fresh start following bankruptcy

Question 27

Discharge is available to ____ but not ___

Answer 27

individuals but not businesses

Question 28

Discharge is not available to anyone who has been discharged from bankruptcy in the previous….

Answer 28

8 years

Question 29

Some debts are not dischargeable

Answer 29

• tax debts
• fraud
• property settlements
• cash advances in excess of $925
• educational loans

Question 30

Types of Bankruptcy

Answer 30

• Chapter 7
• Chapter 11
• Chapter 12
• Chapter 13

Question 31

Chapter 7 Bankruptcy

Answer 31

liquidation, the business is over and does not plan to continue operations after

Question 32

Chapter 11 Bankruptcy

Answer 32

business is planning to reorganize their debts and continue operations after bankruptcy

Question 33

Chapter 12 Bankruptcy

Answer 33

special bankruptcy as it pertains to family farms & commercial finishing operations

Question 34

Chapter 13

Answer 34

consumer debt adjustments (chaopter 11 but for individuals)