1500 Security Interests, Creditors, Priorities and Bankruptcy
Chapter 33 Creditors, Debtors, and Bankruptcy
-
Upload
kasper-sanders -
Category
Documents
-
view
46 -
download
0
description
Transcript of Chapter 33 Creditors, Debtors, and Bankruptcy
Chapter 33Creditors, Debtors, and Bankruptcy
33—1 Legal Protection of Creditors
Pages 593-596
Laws That Protect CreditorsPrimary concern of a typical creditor is
that the loan be paid promptly when due.
Secure debts-personal property or real property are common ways the law allows creditors to protect themselves (sell or process)
Pledges- Have procession of the property until the debt is paid (stocks)
Pawn- Collateral for this type of pledge (jewelry, camera, musical instrument)- pawn ticket
Involuntary Liens Lien- a claim, encumbrance, or charge against
property that give the creditor the right, in case of default on a payment that is due, to sell the property and to use the proceeds from the sale to pay the dept.
Mechanic’s Lien- allows a person who had not been paid for labor or materials furnished to build a home, building or other real property improvement to file a legal claim against the property. If the debt is not paid, the realty may be sold
Artisan’s Lien- allows persons who have not been paid for service, such as repairing a car or watch to retain possession of the serviced items until the service charges are paid.
Laws Involving Third PartiesSuretyship – Creditor who wishes assurance beyond the
debtor’s promise to pay may demand that a creditworthy third party assumes the liability. A contractual relation in which a third party agrees to be primarily liable for the debt or obligation if payment or performance becomes overdue. Three parties are involved:
PRINCIPAL DEBTOR CREDITOR SURETY- 3rd party promises to be liable for debt
Guarnety- Protects the creditor-guarantor agrees to pay if the principal debtor fails to do so. The guarantor is only secondarily liable.
Laws Concerning Unsecured DebtsUnsecured Debts-debt based only on the oral or written promise
of the debtor. Must sue the debtor for breach of contract.
Laws Allowing Garnishment of Wages Once a creditor's claim is shown to be legally valid and fair in a court
hearing the creditor may receive a portion of the debtors wages directly from the debtors employer- 25% of take home pay- Consumer Credit Protection Act