NEW - Secured-Transactions

NEW - Secured-Transactions - SECURED TRANSACTIONS Remedies...

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SECURED TRANSACTIONS Remedies for Unsecured Creditors I. Types of Creditor debtor relationships a. Bank-Debtor (usually governed by K) b. Judgment Holder-Defendant c. Driver-Other Driver (automobile liability) II. In order to collect, unsecured creditors must: a. Bring a lawsuit b. Get a Judgment. To collect on a judgment, you must: i. Secure a writ 1. of execution 2. of attachment : debtor owns the property 3. of garnishment : used to seize assets belonging to the debtor that are held by a third party. a. Classic example is a bank account. If you’re lucky enough to find a bank account, get a writ of garnishment immediately. ii. Find the stuff you can direct the Sheriff to take 1. this usually occurs through formal discovery iii. Sheriff must levy the goods 1. you can have successive levies on a single writ 2. It is generally reasonable to have the sheriff collect at any time during the day, and some (but not unreasonable) danger may be expected iv. When the writ is returned , the Sheriff can take no more goods on it. 1. Sheriff returns the writ when there is nothing left to reasonably collect, or three months have passed. 2. Must then get an alias writ or additional writ to get anything more v. Amercement 1. If the creditor can prove that the sheriff has completely failed to perform his duty, he can hold the sheriff liable for failure to collect. This is a fairly rare occurrence —courts are going to be sympathetic to the sheriff. III. Limitations on Collection a. Self-Help Remedies i. Are generally forbidden by law for unsecured creditors, and will result in a claim for conversion or larceny . b. Movement of Assets i. A debtor is free to move their assets, and even to secret away funds. Usually, the only probable recourse is a charge of perjury during discovery. ii. Generally, you cannot seize assets that the debtor has transferred to third parties. 1. Fraudulent Conversion : You may be able to claim fraudulent transfer if the transfer was done solely for the purpose of thwarting the ability of the creditor to collect . 2. Payment of other debts, even if it leaves nothing for another judgment creditor, is not fraudulent. iii. Assets moved or located to another state: must file to get a writ in the state where the assets are located, and the sheriff levying it must be from that state. 1
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c. Debtor Protection Statutes i. Exempts certain items from execution in the collection process. Often includes certain homestead exemptions. ii. If the value of an item (e.g., a car) exceeds the protected limit, you would sell the item, and give the debtor the exempted amount. IV. Efficient System of Secured Credit: a. Process = Cheap. If the secured credit system is to work, we have to be able to avoid all those costs and constant process, pleadings, discovery, etc., inherent in the unsecured collection world. b.
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NEW - Secured-Transactions - SECURED TRANSACTIONS Remedies...

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