SECURED TRANSACTION OUTLINE

SECURED TRANSACTION OUTLINE - ProfessorSmith A a Debtor:,...

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SECURED TRANSACTIONS - OUTLINE Professor Smith A. Creditors’ Remedies Under State Law a. Debtor:       : “A debtor means a person having an interest, other than a security interest or other  lien, in the collateral, whether or not the person is an obligor.” Someone who has an interest in  the collateral. b. Obligor     : a person with respect to an obligation secured by a security interest in or an  agricultural lien on the collateral, owes payment or other performance of the obligation. c. Secured Party     : a person whose favor a security interest is created or provided for under a  security agreement, whether or not any obligation to be secured is outstanding.  Usually the  bank. d. Creditor:       anyone owed a legal obligation that can be reduced to a money judgment is a  creditor of the party owing the obligation. i. Ex.:  car accident victim, company w/ a valid patent infringement claim, consumer of  defective product, mfg’er or seller of goods. 1. Unsecured Creditor:   (aka: general creditors or ordinary creditors) a. Someone who has NOT contracted with the debtor for secured status.  Includes tort victims and judgment creditors. b. Limitations on Compelling Payment i. No “fishing expeditions” looking for property to take. ii. Liability for damages to 3 rd  party’s property. c. Unsecured creditors get only what is left after provisions have been  made for secured creditors. d. Why be an unsecured creditor? i. Higher rate of interest ii. Unwillingly unsecured – such as tort victim  iii. Accidentally – through poor contract negotiations/drafting errors e. Co-signor     :  an obligor on the debt (w/ the owner (buyer) of the property). f. Bank Financing – Secured Credit i. Things the bank will want: 1. Loan Agreement – contract to borrow money 2. Security Agreement – lien on personal property 3. Financing Statement – notice to the world of lien g. Exemptions from Creditor’s Ability to take property: i. Homestead exemptions (with or w/o dollar limitations) ii. Debtor’s wages – Fed. Statutes say 75% of debtor’s earnings are exempt. iii. Pensions and retirement accounts h. Legal Mechanisms i. Courts can imprison debtors for refusing to meet their legal obligations. 1. Exclusions: a. Judgments for personal injuries - 1 -
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b. Wages of working people c. Breaches of most kinds of contracts i. How to get your money? i. Complaint ii. MSJ or trial iii. Get a Judgment iv. Get a writ of execution v. Have the sheriff execute the writ by levying on the property 1. execution: seizure and sale of debtor’s property to satisfy the judgment 2. certain things are exempt from execution – governed by state statutes a.
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