Debtor-Creditor: Non-Bankruptcy Flashcards
artisan’s lien
lien on personal property imposed by law for nonpayment of a debt relating to an improvement on or repair to an item of personal property.
garnishment
involves an involuntary lien on money (intangible personal property)
judgment
order by a court indicating an amount owed and to whom it is owed
Equal Credit Opportunity Act of 1974
- prohibits businesses which regularly extend credit from discriminating on the basis of sex, race, national origin, age, or religion
- Originally designed to eliminate the practice of lenders refusing to extend credit to women of child bearing age.
Fair Debt Collections Practices Act
enacted to stop abusive and deceptive practices by debt collectors.
Consumer Protection Act
early attempt to require disclosure of charges by lenders.
Financial Services Modernization Act of 1999
law designed to protect privacy in connection with transmissions by financial institutions.
According to the Fair Credit Reporting Act, what must the creditor do for the debtor?
- If advised by a debtor that a file contains inaccurate information, a credit reporting agency must investigate the items by presenting to its information source all relevant evidence submitted by the debtor. 2. Corrections are only required if the information on file is incorrect or out of date. 3. If a dispute is not resolved, the debtor’s evidence may become a permanent component of the debtors credit record.
Fair Credit Reporting Act
designed to promote accuracy, fairness, and privacy of information in the files of every “consumer reporting agency.”
When are guarantors released from obligation?
- In the refusal by a creditor of a principal debtor’s tender of payment.
- Failure to promptly dispose of collateral or damage to some of the collateral may partially release the guarantor(s).
Does granting an extension to principal debtor release a guarantor or surety?
Granting an extension to the principal debtor may release a surety from all or part of his/her obligation.
When is a surety released fully or partially?
- If the creditor releases of a portion of the collateral
- OR, releases the principal debtor without reservation of rights against the sureties
- OR, materially changes the contract which created the principal obligation (such as by granting payment extensions).
Will negligence by creditor in securing the collateral release a guarantor?
Yes.
Will negotiating the promissory note w/out debtor’s consent release a guarantor?
No.
When a creditor releases a co-surety without reservation of rights against the remaining sureties…
he obligation of the remaining sureties is reduced by the amount their right of contribution has been adversely affected. Thus, if the debt which falls to the co-sureties ($500,000) is divided evenly, each of the 3 partners is liable for $167,000. When Grange released Dance after Dance paid $100,000, Gally lost rights against Dance to the extent of $67,000.
When guarantors agree among themselves as to the division of liability…
- Each guarantor is potentially liable for the entire obligation.
- If one guarantor pays, s/he is subrogated to the rights of the creditor.
contribution
refers to a co-surety’s right, after paying, to recover from other co-sureties
subrogation
- When a co-surety repays the principal obligation, in whole or in part, the co-surety is subrogated to the rights of the creditor against the principal debtor.
- By virtue of subrogation, a surety, after paying, steps into the shoes of the creditor to asserts rights against collateral, against the principal debtor, or against other co-sureties.
exoneration
refers to a surety’s right to force the principal debtor to pay
indemnity
refers to protection from liability, usually after making full payment
3-day cooling-off period (Truth-in-Lending Act)
Under the Truth in Lending Act, a consumer may rescind a consumer credit transaction involving a non-purchase-money security interest in the consumer’s principal dwelling within 3 business days if all disclosure requirements are met, or during an extended statutory period, due to disclosure violations such as failure to give adequate notice of right to rescind.
The disclosure required under the Truth in Lending Act must be made:
- “Clearly and conspicuously,”
- in meaningful sequence,
- in writing,
- AND in a form that the consumer may keep.
Under the Truth-in-Lending Act, what disclosures must creditors make to debtors?
- APR
- Statement of billing rights
- Method of determining finance charges and balances
- Amount or method of determining any membership or participation fees,
- Security interests (if applicable),
- Periodic statement of the account,
- AND, a statement regarding billing error resolution.
It may be legally proper for a creditor to seize a debtor’s property prior to obtaining a judgment against the debtor, but ONLY if…
the creditor does not breach the peace.
Are certain federal payments exempt from creditor garnishment?
Soc. Sec. is.
Do state laws exempt certain personal property from seizure by creditors?
Yes, this typically includes items such as provisions for consumption, apparel, and tools or equipment used in trade.
homestead exemption
protects debtors from satisfaction of debt against equity in the debtor’s primary residence, with the exceptions of mortgage liens and IRS tax liens.
Are there are limitations set by federal and state law on the percentage of wages that can be garnished by creditors?
Yes.
