Unit 5: Creditor's Rights and Bankruptcy Flashcards
(43 cards)
loans are backed by collateral, which is a specific property (such as a car or a house) pledged by a borrower to ensure repayment
secured creditors
companies that provide credit cards, are not backed by collateral
unsecured creditors
A claim against specific property to satisfy a debt or protect a claim for the payment of debt
lien
A statutory lien on the real property of another, created to ensure payment for work performed and materials furnished in the repair or improvement of real property, such as a building
mechanic’s liens
A possessory lien given to a person who has made improvements and added value to another person’s personal property as security for payment for services performed
artisan’s liens
is created when a court grants a creditor an interest in the debtor’s property, after a court judgment
judicial lien
issued before a judgement
writ of attachment
issued after a judgement
writ of execution
A legal process used by a creditor to collect a debt by seizing property of the debtor (such as wages) that is being held by a third party
garnishment
An express contract in which a third party to a debtor-creditor relationship (the surety) promises to be primarily responsible for the debtor’s obligation
suretyship
the third party making the guaranty (the guarantor) agrees to satisfy the debt of another (the debtor) only after the principal debtor defaults
guaranty
The right to step into the OG debtors’ shoes and get back what was lost or paid for when they helped out
right of subrogation
The surety/guarantor is entitled to receive from the debtor all outlays made on behalf of the suretyship arrangement
The Right of Reimbursement
The right of a co-surety (one of two or more joint-sureties) who pays more than his or her proportionate share on a debtor’s default to recover the excess paid from other co-sureties
The Right of Contribution
The legal process by which a mortgagee either takes title to or forces the sale of the mortgagor’s property in satisfaction of a debt
foreclosure
Methods of avoiding foreclosure
postponement of part or all of the payments on a loan for a limited time
forbearance
Methods of avoiding foreclosure
A formal contract between a debtor and his or her creditors in which the parties agree to negotiate a payment plan for the amount due on the loan instead of proceeding to foreclosure
workout agreement
Methods of avoiding foreclosure
A lender may sometimes agree to a short sale which is a sale of the real property for an amount that is less than the balance owed on the mortgage loan
short sale
often referred to as ordinary, or straight, bankruptcy
Liquidation under Chapter 7
this occurs when the debtor’s creditors force the debtor into bankruptcy proceedings
involuntary bankruptcy
a doctrine that protects secured creditors from losing their security as a result of an automatic stay
The adequate protection doctrine
The basic duty of the trustee is to collect the debtor’s available estate and reduce it to cash for distribution, preserving the interests of both the debtor and the unsecured creditors
the Bankruptcy Trustee
The trustee has the power to require persons holding the debtor’s property at the time the petition is filed to deliver the property to the trustee. This right is equivalent to that of a lien creditor
strong-arm power
enable the trustee to set aside (avoid) a sale or other transfer of the debtor’s property and take the property back for the debtor’s estate
Powers of avoidance
