Module 8: Debtor and Creditor Law Flashcards
money laundering
the false reporting of income from criminal activity as income from legitimate business
account agreement
a contract that specifies the rights and obligations of a bank and its customer
overdraft
when money is withdrawn from a bank account with the result that the balance in the account goes below zero
negotiable instrument
a signed doc containing an unconditional promise or order to pay a specific sum on demand or on a specified date to a specific person
promissory note
a written promise to pay another person a specific amount on demand or on a specific date
bill of exchange
a written order by one person (the drawer) to a 3rd person (the drawee) to pay money to another person (The payee)
holder
a person who has possession of a negotiable instrument i.e. cheque
holder in due course
a holder in good faith without notice of defects, who acquires greater rights than the parties who dealt directly w each other as the drawer and payee
consumer note
a negotiable instrument signed by a consumer to buy goods or services on credit
bank draft
a cheque written by a bannk on the request (and payment) of its customers
certified cheque
a cheque on which the drawee bank has guaranteed payment
stop payment
when the drawer of a cheque orders its bank not to pay the holder who presents the cheque for payment
endorsement in blank
signing a cheque without any special instructions
restrictive endorsement
signing a cheque for deposit only to a bank account
special endorsement
signing a cheque and making it payable to a specific person
personal defence
a defence that affects the parties themselves rather than the instrument
real defence
a defence based no the instrument being fundamentally flawed
secured credit
a debt where the creditor has an interest in the debtor’s property to secure payment
unsecured credit
a debt where the creditor has only a contractual right to be repaid i.e. usually trade credit
letter of credit
a written promise by a buyer’s bank to a seller’s bank to pay the seller when specified conditions are met
events of default
failure by the debtor to make required payments on a loan or to fulfill its other obligations under the credit agreement
collateral
property in which a creditor takes an interest as security for a borrower’s promise to repay a loan
covenants
provisions found in credit agreements which require debtors to carry on business in accordance w specific requirements (basically, conditions)
letter of commitment
a document that is provided by a lender to a borrower and sets out the terms of a loan
general security agreement
a security agreement that includes all of the debtor’s personal property assets as collateral
After-acquired property
collateral that includes personal property acquired by the debtor during the term of the loan
security interest
an interest in personal property that is intended to secure payment or performance of an obligation (usually a debt)
registration
the registration of a financing statement to record a security interest
financing statement
the doc registered as evidence of a security interest
purchase-money security interest (PMSI)
a security interest that enables the debtor to acquire assets and gives the secured party priority over existing perfected security interests
acceleration calause
a term of a loan agreement that makes the entire loan due if one payment is missed
receiver
a person appointed by the secured party or by the court to seize, and usually sell, collateral
guarantee
a conditional promise to a creditor to pay a debt if the debtor defaults
indemnity
a primary obligation to pay a debt owed by another person
subrogation
the right of a guarantor to recover from the debtor any payments made to the creditor
consumer debt
a loan to an individual for a non-commercial purpose
credit bureau
an agency that compiles credit info on borrowers
collection agency
an agency that assists lenders in obtaining payment on outstanding loans
payday loans
short term loans for a relatively small amount of money, provided by a non-traditional lender to an individual
continuing guarantee
a guarantee where the guarantor is liable for any past, present, and future obligations of the debtor
trustee in bankruptcy
the person who has legal responsibility under the BIA for administering bankruptcies and proposal
estate
the collective term for the assets of a bankrupt individual or corporation
insolvent
unable to meet financial obligations as they become due or having insufficient assets, if liquidated, to meet financial obligations
proposal
a formal process administered by a trustee in bankruptcy that allows a debtor to restructure its debts in order to avoid bankruptcy
debtor in possession (DIP) financing
secured credit provided to companies during the reorganization process with priority over existing secured creditors
assignment in bankruptcy
the debtor’s voluntary assignment to the trustee in bankruptcy of legal title to the debtor’s property for the benefit of creditors
bankruptcy order
an order of the court resulting in a person being declared bankrupt
act of bankruptcy
one of a list of specified acts that the debtor must commit before the court will grant a bankruptcy order
inspector
a person appointed by creditors to act on their behalf and supervise the actions of the trustee in bankruptcy
transfer at undervalue
transfer of property or provision of services for less than fiar market value
arm’s length
people who are independent of each other and not related
bankruptcy offences
criminal acts defined by the Bankruptcy and Insolvency Act (BIA) in relation to the bankruptcy process
proof of claim
a formal notice provided by the creditor to the trustee of the amount owed and the nature of the debt
preferred creditors
certain unsecured creditors who are given priority over other unsecured creditors in the bankruptcy distribution
discharge of bankruptcy
an order releasing the debtor from bankrupt status and from most remaining debts
