Creditor's Remedies - State Law

Question 1

Unsecured creditors remedies and what they cannot do

Answer 1

Become a judgement creditor, threaten to take legal action, negotiate with the debtor for better terms. Cannot use self-help

Question 2

Who do exemptions affect?

Answer 2

judgement creditors only - not secured creditors

Question 3

A transaction in the form of a lease creates a SI if:

Answer 3

lessee has to pay consideration of the right of possession, has an obligation for term, rights arent subject to termination, and lessee has power to buy goods for no/nominal consideration

Question 4

Secured Creditor remedies

Answer 4

Self-help (cannot breach the peace), judicial (replevin), non-judicial (power of sale or deed of trust), deed in lieu of foreclosure

Question 5

Oversecured

Answer 5

value of the collateral is greatern than the value of the lien

Question 6

undersecured

Answer 6

debtor owes deficiency

Question 7

Why do judicial sales bring in low amounts?

Answer 7

poor notice, buyer takes poor title, debtor can be hostile, right to redemption

Question 8

Credit bidding

Answer 8

secured creditors can bid any amount up to the amount of the debt on the property without putting up any real money. You can only do this at your own foreclosure sale

Question 9

If creditor cannot collect on the deficiency, what should they bid at the sale?

Answer 9

The full amount of the debt on the property - forces others to bid more than the debt and the redemption amount is then the full amt of debt

Question 10

If creditor can collect the deficiency and they are the only bidder, how much should they bid?

Answer 10

Enough so it is not a grossly inadequate amount

Question 11

Info to get before you bid at a foreclosure sale

Answer 11

house value, title, drive by the property, comparables, mortgage records, newspaper

Question 12

Deficiency Amount =

Answer 12

Balance on loan + principal + Interest + Atty fees + expenses of sale - Amount collateral sells for

Question 13

Redemption Amount =

Answer 13

balance on loan + principal + interest + atty fees + expenses of sale

Question 14

Notice requirements for foreclosure sale

Answer 14

Consumer goods must be commercially reasonable. Non-consumer goods have 10 days before disposition. No notice is necessary if perishable or the collateral customarily sold in recognized market

Question 15

Credit bid requirements for foreclosure sale

Answer 15

If public sale, can bid if it is your foreclosure and secured cr. If private sale, no unless item is subject to standard price quotations or openly traded.

Question 16

When can debtor redeem?

Answer 16

Before the sale is complete or before cr accept property in satisfaction of the debt

Question 17

If the sale was not commercially reasonable, the court will lower your deficiency to…

Answer 17

commercial sale - what it would have been if done properly. Consumer sale - ct will apply commercial standard or bar deficiency

Question 18

A sale was commercially reasonable if

Answer 18

in usual way on recognized market, at price current in recognized market, OR in conformity with reasonable practices

Question 19

What happens if creditor breaks rules of the foreclosure sale?

Answer 19

lose the deficiency, restrain sale, liability for surplus.