Terms to know

Question 1

Debtor

Answer 1

One who owes a debt or the performance of an obligation to another

Question 2

Creditor

Answer 2

One to whom a debt or performance of an obligation is owed

Question 3

Unsecured Creditor

Answer 3

Creditor with a claim against debtor for which no specific assets (called collateral) are pledged

Question 4

Judgment Creditor

Answer 4

unsecured creditor who has obtained court judgment to establish liability

Question 5

Secured Creditor

Answer 5

Creditor with a claim against debtor for which specific assets are pledged

Question 6

Security Interest

Answer 6

property right contingent on nonpayment of a debt. UCC §9-109(a)

Question 7

Foreclosure

Answer 7

cuts off debtor’s rights to pay debt and keep the collateral. UCC §9-601, 9-610

Question 8

Right of Redemption

Answer 8

debtor’s right to keep the collateral by paying off the debt. UCC §9-623

Question 9

Judicial foreclosure

Answer 9

Process accomplished by entry of court order

Question 10

Non-judicial foreclosure

Answer 10

(power of sale/deed of trust in context of real property) process set by state law that does not involve the courts.

Question 11

Account

Answer 11

A right to payment of a monetary obligation for property sold or services rendered §9-102(a)(2)

Question 12

Account Debtor

Answer 12

Person obligated on an account §9-102(a)(3)

Question 13

Accounts financing

Answer 13

borrowing against a group of accounts

Question 14

Uniform Voidable Transactions Act

Answer 14

provides (2) types of voidable transfers:

1. those made with actual intent to hinder, delay, or defraud §4(a)(1) unless buyer took in good faith and for reasonably equivalent value, transfer not voidable §8(a)
2. those made without receiving reasonably equivalent value when debtor insolvent or rendered insolvent by transfer §5(a)

Question 15

Petition

Answer 15

Document that commences a bankruptcy case

Question 16

Schedules

Answer 16

Lists of assets and debts, filed with petition

Question 17

proof of claim

Answer 17

creditor’s statement of debt owing (§501); claim calculation according to §502,506

Question 18

Automatic stay

Answer 18

an “injunction” that takes effect on the filing of a bankruptcy case (§362)

Question 19

Motion to lift automatic stay

Answer 19

secured creditor remedy; show (1) lack of adequate protection (§362(d)(1)) OR (2) debtor has no equity in property AND property not necessary for an effective reorganization (§362(d)(2))

Question 20

Adequate protection

Answer 20

petition against decline in the value of the secured creditor’s collateral (§361,362)

Question 21

property of the estate

Answer 21

all legal or equitable interests of the debtor in property as of the commencement of the case, except exempt property (§522(d), 541)

Question 22

Discharge

Answer 22

Injunction against future efforts to collect the debt from the debtor (but not the debtor’s property)

Question 23

Reaffirmation

Answer 23

Debtor’s election not to discharge a debt, but to enter into deal with secured creditor that requires debtor to pay off debt post-discharge (§524)

Question 24

Redemption

Answer 24

Debtor’s election to pay off amount due or fair market value of collateral, whichever is less, in exchange for property (§722)

Question 25

Ride-through

Answer 25

Debtor keeps paying pre-petition debt post-discharge and hopes that secured creditor does not foreclose on property

Question 26

Non-recourse debt

Answer 26

discharged security debt is essentially a non-recourse claim against the asset; secured creditor cannot pursue the debtor for unpaid portion of the debt

Question 27

discharged v. undischarged debt

Answer 27

creditors can pursue undischarged debt post-bankruptcy (with some exceptions, most unsecured debt is discharged)

Question 28

Bifurcation

Answer 28

Secured creditor's claim is broken into 2 parts: (1) secured claim in amount of value of collateral; (2) unsecured claim in remaining amount of debt owing

Question 29

Composite Document Rule

Answer 29

two or more documents can be combined to find the elements for creating a security interest. Must show: (1) a signed agreement evincing an intent to create a security interest AND (2) actual intent to create a security interest