fall 2008 bankruptcy

fall 2008 bankruptcy - Todays topics General ideas on...

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Today’s topics General ideas on bankruptcy Harvard university study Creditor’s rights More about bankruptcy
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default In bankruptcy context: A debtor’s failure to pay a debt when it is due (failure to pay as promised)
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Remedies available to creditors Liens Garnishment Creditors’ composition agreements Mortgage foreclosure Suretyship and guaranty
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liens A lien is an encumbrance (claim against) property to satisfy a debt or protect a claim for the payment of a debt.
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Mechanic’s Lien: Nonpossessory filed lien on real estate for labor/services. Artisans’ Lien: Possessory lien on personal property for labor done to property.
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Judicial Liens: Court-ordered seizure/sale of property. Attachment. Writ of Execution.
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Garnishment Judicial order that allows creditor to collect a debt by seizing property of the debtor that is being held by a third party, usually wages.
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Creditor’s Composition Agreements A bird in the hand is worth two in the bush Creditor takes less in full satisfaction of debt
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mortgages Creditor takes security interest in debtor’s property If debtor defaults, creditor can foreclose on the mortgaged property Seeing lots of foreclosures in recent news Deficiency judgment – went sale of the property does not cover foreclosure costs and mortgage debt
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Suretyship and Guaranty Promise by a third person (Surety/ Guarantor) to pay a the Creditor a debt owed by Debtor in the event the Debtor does not pay. Principal Debtor Creditor Surety / Guarantor
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Surety Express contract between the surety and the creditor. Surety has primary liability. Creditor can demand payment from surety at any time after debt is due. Creditor need not exhaust all legal remedies against the debtor before holding the surety responsible.
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Secondarily liable, debtor must default, creditor has attempted to collect from the debtor. Statute of Frauds requires guaranty to be in writing. Case 12.1 JSV, Inc. v. Hene Meat, Co. (2003).
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fall 2008 bankruptcy - Todays topics General ideas on...

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