Creditor's Rights Flashcards
What kind of creditors may challenge a debtor’s transfers?
Existing creditors may challenge either fraudulent or voluntary conveyances made for less than fair market value. Future creditors may only challenge transfers made with the intent to defraud.
What two kinds of creditor’s are there in relation to a debtor’s transfer?
Creditors are divided into two categories: (i) existing creditors, who have liquidated their claims against the debtor by agreement (e.g., Article 9 security interests and mortgages) or judgment at the time of the challenged transfer; and (ii) future creditors, who obtain or reduce their claims to judgment after the challenged transfer.
What is a constructively fradulent transfer?
A conveyance, assignment, or transfer of real or personal property made by an insolvent transferor (or one who is rendered insolvent by the transfer) made for less than fair market value may be set aside by existing creditors.
How does a creditor perfect its claim against a debtor’s transfer?
A creditor may bring an action to set aside a conveyance even before obtaining a judgment and lien. The filing of the action creates a lien against the transferred property. Existing judgment creditors may file a similar suit and can also seek to set aside voluntary transfers as well as fraudulent conveyances. The transferee (or grantee) is a necessary party to any such action.
What is a lis pendens?
A lis pendens is a public act that allows a lien of attachment to be effective against a bona fide purchaser. A lien attaches on property of a third party when the third party is named as a co-defendant and served with a copy of the attachment.
Can a creditor reach a debtor’s back rent payment to an LLC of which the debtor has sole control?
YES. Normally a preferential transfer to a creditor that satisfies an existing debt is not fraudulent. However, when the debtor controls the creditor entity, the debtor cannot convey property to satisfy its own debt before the debts of other creditors.
What is a writ of fieri facias?
The writ of fieri facias commands the sheriff to find the debtor’s property, seize it, and sell it to satisfy the judgment. The writ is used to execute upon all forms of personal property that can be described as chattel and that are not exempt. A lien attaches upon levy. A proper levy occurs when the property is subject to the “power and view” of the Sheriff.
How can a creditor stop an intended out of state sale?
If any person has a claim, legal or equitable, to damages for breach of any contract, he may sue for an attachment of the debtor’s property. It is sufficient grounds for an action for pre-trial levy, seizure, or attachment if the debtor: (1) is a foreign corporation; (2) is removing or about to change his domicile; (3) is removing or intending to remove his property out of Virginia; (4) is converting or about to convert his property into money, securities, or evidences of debt with the intent of hindering his creditors; (5) has assigned or disposed of or is about to assign or dispose of his estate; or (6) has absconded or is about to abscond with his property.
Can a creditor seek to attach a lien to property the creditor did not sell to the debtor?
Yes. Attachment liens in Virginia do NOT require the property to have been sold by the creditor. The creditor can seek to attach any property of the defendant located in Virginia, even if not originally obtained from the creditor.
Can a creditor attach a lien to a VA citizen’s property?
Usually not.
In order to obtain an attachment lien, the plaintiff must satisfy one of the statutory grounds. In general, these grounds require the defendant to act with respect to his property with the intent to hinder, delay, or defraud his creditors or to remove himself or his property from Virginia. There are exceptions if the defendant is a foreign corporation or is not a resident of Virginia
When may a FUTURE creditor set aside a debtor’s transfer of property?
future creditor may set aside a transfer by a debtor that is fraudulent or constructively fraudulent, even if the transfer does not involve goods that the creditor has furnished to the debtor.
Under the VA poor man’s statute, what can a VA resident protect from a creditor?
– engagement and wedding rings
– $6,000 car (10K if work car)s limited to $6,000.
– $1,000 clothes
– $5,000 household furnishings
How does a creditor perfect a security interest in stocks?
hen a creditor has a security interest in stocks, a creditor may perfect its security interest by either filing a financing statement with the Virginia State Corporation Commission or by taking control of the stock. This applies whether those stocks are in the form of a certificate or in electronic form.
Let’s say you lose a case and find out later it’s case the other party bribed a witness to lie. What can you do?
Enjoin the judgment. Suits to enjoin the enforcement of or to set aside a judgment can be brought only in special circumstances, usually involving fraud or mistake. An independent equitable action to set aside a judgment or decree requires proof of the following elements: (i) a judgment which ought not, in equity and good conscience, to be enforced; (ii) the existence of a good defense to the alleged cause of action on which the judgment is founded; (iii) fraud, accident, or mistake which prevented the defendant in the judgment from obtaining the benefit of his defense; (iv) the absence of fault or negligence on the part of the defendant; and (v) the absence of any adequate remedy at law.
No timeline, and your lack of diligence doesn’t erase other party’s extrinsic fraud.
In VA, what steps must a PMSI holder take to get priority in inventory where there’s an existing lien on “all future inventory”?
where the collateral is inventory (8.9A-102(a)(48)), a PMSI will have super priority only by complying with the requirements of 8.9A-324(b), which require that the creditor, before handing over possession of the
inventory to the debtor (1) send a special written notice to other security interest holders (here, BANK), and (2) take steps to assure that its PMSI will be perfected at the time the debtor receives possession.
