Chapter 16 Finance

Question 1

Conditional Sale

Answer 1

in which the seller provides credit to the purchaser, holding title until the goods are paid for

Question 2

Chattel Mortgage

Answer 2

a loan for which a creditor provides credit to the debtor, securing the loan by taking title of a good such as a car

Question 3

Collateral

Answer 3

goods or property used to secure a debt

Question 4

Accounts Receivable

Answer 4

funds owed to a business for goods or services provided to customers

Question 5

Operating Lease

Answer 5

a lease in which the goods are returned to the lessor at the end of the lease period

Question 6

Personal Property Security Act (PPSA)

Answer 6

a act that indicates the process of personal property

Question 7

Lease to Purchase

Answer 7

a lease in which title to the goods is transferred to the lessee at the end of the lease period

Question 8

Attachment

Answer 8

under the PPSA, the situa-tion in which value has been given pur-suant to the contract, giving the creditor a claim against the assets used as secu-rity if there is a default by the debtor

Question 9

Perfection

Answer 9

pertection of a secured creditor’s claim either by registering the secured obligation or by taking possession of the collateral

Question 10

Priority of Creditors

Answer 10

when there are two or more creditors, the one entitled to be paid first has priority; for example, a registered lien usually has first claim ( over other interests) to goods used as security

Question 11

Purchase Money Security Interest (PMSI)

Answer 11

a security interest on specific goods that has priority over a general security agreement provided it is regis-tered within a specified time

Question 12

Right to Redeem

Answer 12

after a creditor has taken possession of collateral, the right of the debtor to reclaim it on payment of any money owing

Question 13

Guarantee

Answer 13

a written commitment whereby a guarantor agrees to pay a debt if the debtor does not

Question 14

Indemnity

Answer 14

a primary obligation of a third party to pay a debt along with the debtor

Question 15

Fraudulent Transfer

Answer 15

a debtor’s transfer of property in an attempt to keep it out of the hands of creditors; not a valid sale at a fair price to an innocent third party

Question 16

Bona Fide Purchaser for Value

Answer 16

innocent third party who has paid a fair price for goods under claim by creditor

Question 17

Fraudulent Preference

Answer 17

a debtor’s pay-ment of money to one creditor to give that creditor preference over the other creditors

Question 18

Insolvency

Answer 18

inability of a person to pay her debts as they become due

Question 19

Bankruptcy

Answer 19

process by which an insol-vent person voluntarily or involuntarily transfers assets to a trustee for distribu-tion to creditors

Question 20

Trustee in Bankruptcy

Answer 20

the licensed pro-fessional appointed to administer the estate of a bankrupt for the benefit of the creditors

Question 21

Estate (of a bankrupt)

Answer 21

also the property of a bankrupt given to the Trustee in Bankruptcy

Question 22

Proof of Claim

Answer 22

document filed with the Trustee in Bankruptcy establishing valid-ity of a creditor’s claim

Question 23

Preferred Creditor

Answer 23

creditors who, by legislation, must be paid before other unsecured creditors

Question 24

Unsecured/General Creditor

Answer 24

Creditor that are unsecured, usually the last one to get paid and get paid the least.

Question 25

“Super Priority”

Answer 25

the federal government has priority over all other creditors, since they have super priority.