REG mod 31 Flashcards
What is a secured interest in an asset?
It is a legal interest in the asset. This is meant to secure payment / performance from the debtor.
What is exoneration?
This term is used to describe the situation where the debtor is not making the required payments to the creditor, and the surety goes to court and in an attempt to force the debtor to pay. This is generally done prior to the debtor going into default.
How may a surety be discharged of their responsibility?
When the creditor is satisfied as to the performance or payment from the debtor.
If the creditor acts in a manner that will significantly increase the risk to the surety.
If the debtor materially changes the agreement with the creditor and this increases
What is the difference between a surety and a guarantor?
The level of liability. A surety is primarily liable for the debt; this means the creditor may go directly to the surety for payment. In contrast, a guarantor is secondarily liable for the debt. This means the creditor must seek payment from the debtor pr
Describe some of the major points in the Fair Debt Collection Practices Act.
Creditors cannot abuse or harass debtors
Creditors may not contact debtors after the debtor hires an attorney
Creditors may only call during reasonable hours
Can a creditor, who perfected his security interest in a debtor’s inventory, take the inventory from a consumer who purchased the inventory from the debtor?
No, buyers in the ordinary course of business take the goods free from any security interest.
In what circumstance can the first creditor to perfect their interest not prevail?
If one of the creditors is a Purchase Money Security Creditor.
What type of liability do co-sureties have?
Joint and Several Liability to the creditor
What is the right of contribution?
This is the right of the surety to be reimbursed by the co-sureties for their respective share of the payment.
What is subrogation?
The term used to describe when the surety pays the debt and gains the same rights that the creditor had against the debtor. In essence, the surety becomes the creditor. This is done after the debtor has defaulted on the loan.
After a debtor defaults, a creditor may take possession of the collateral by any means necessary. True / False
False, the creditor may take the collateral if they can do so without breaching the peace (breaking the law). For example, the creditor cannot trespass to take possession of the collateral.
If two creditors ‘perfect’ their security interest, which creditor would prevail?
Generally, the first to perfect their interest.
