Chapter 26 Flashcards
What are Secured Credits?
Debt where the creditor has an interest in the debtor’s property to secure payment
What are Unsecured Credits?
Debt where the creditor has only the contractual right to be repaid
What is a Trade Credit?
Unsecured, just an unconditional promise
What is a Letter of Credit?
Written promise made by a buyer’s bank to a seller’s bank to pay the seller when he specified conditions are met
What is a Letter of Commitment?
Document provided by a lender to a borrower and sets out the terms of a loan (amount of loan, how it will be disbursed etc)
What is the Personal Property Security Act?
Creates a security interest, interest in personal property that is intended to secure payment/performance of an obligation
What is Attachment for PPSA?
Debtor has rights in the collateral, secured party has granted the loan, debtor has signed a written agreement
What is Perfection for PPSA?
Has Attachment AND Registration(registration of a financing statement to record a security interest)
What happens when there are 2 unperfected security interested that have both attached?
The first to attach has priority
What happens when 2 security interests are perfected?
First to register has priority NOT first to perfect
What is the Federal Bank Act?
Permits bank to take security in the inventor and other assets of certain business borrowers
What is a Guarantee?
Conditional promise to a creditor to pay a debt if the debtor defaults, between creditor and guarantor
How does the guarantee agreement have to be to be enforceable?
Must be in writing and signed by the guarantor
What is Consumer Debt?
Loan to an individual for a non-commercial purposes
What is a Credit Bureaus?
Provides service to lenders by compiling credit info on consumers and reporting on their credit history
