Ch 14 Class Notes

Question 0

Assurity

Answer 0

3rd party arrangement promises to make good on original
Bet in place of borrower

Assuritor primarily liable to creditor if debtor defaults

Question 1

Creditors rights

Answer 1

Ability to collect money when borrower can’t pay

Question 2

Bankruptcy

Answer 2

When borrower can’t make good on obligations, all debts
Are discharged after money runs out (debtor doesn’t pay
Anymore)

Mechanism created by US constitution
(Ex. Like estate when someone dies)

Question 3

Ch 7 bankruptcy

Answer 3

Trustee takes and liquidates all assets of debtor to pay

Off creditors in terms of priority

Question 4

Ch 11 bankruptcy, how does it affect credit report

Answer 4

Allows for Company reorganization

Stays on credit report for 10 years, company won’t get financing

Question 5

Automatic stay

Answer 5

Injunction where debtor can’t be contacted by creditors

And prevents further action against debtor

Question 6

Priority of creditors, how do creditors get priority?

Answer 6

Creditors that get paid first have priority

Creditors get priority take collateral/security interest in property

Creditors that don’t have collateral have last priority and
Don’t get paid if money runs out