Textbook Chapter 1 Vocab

Question 1

Credit Extension

Answer 1

The extension of credit involves giving the debtor the use of the creditor’s money, and the creditor awaits repayment.

Question 2

Debt Collection

Answer 2

The process through which creditors seek to collect amounts owed by debtors, either informally or through legal proceedings.

Question 3

Creditor-Debtor Relationship

Answer 3

The legal relationship between a party that extends credit (creditor) and a party that borrows or owes money (debtor).

Question 4

Asset Purchase Agreement

Answer 4

A contract by which one party purchases the assets of another, which may include rights to payments.

Question 5

Default

Answer 5

A situation where the debtor fails to repay a loan or meet legal obligations as agreed upon with the creditor.

Question 6

Garnishment Writ

Answer 6

A court order instructing a third party to pay a debtor’s owed amount directly to the creditor.

Question 7

Asset Sale

Answer 7

The sale of a debtor’s assets, often through a sheriff’s sale, to satisfy a creditor’s judgment.

Question 8

Credit Judgment

Answer 8

A legal determination that confirms a debtor owes a specified amount to the creditor.

Question 9

Enforcement of Judgments

Answer 9

The process by which a creditor ensures a court-issued judgment is satisfied, potentially through liens or garnishments.

Question 10

Secured Transactions

Answer 10

Transactions in which the creditor holds a security interest in the debtor’s collateral to ensure repayment.

Question 11

Credit Line Agreement

Answer 11

An agreement between a creditor and a debtor outlining the terms of an extended line of credit.

Question 12

Debt Repayment

Answer 12

The process by which a debtor fulfills their obligation to pay back borrowed money.

Question 13

Collateral

Answer 13

Property or assets that the debtor offers to the creditor as security for the repayment of a loan.

Question 14

Commercial Transactions

Answer 14

Business transactions involving the extension of credit, sale of goods, or provision of services.

Question 15

Installment Sales

Answer 15

Sales where the buyer agrees to pay in installments, typically secured by a security interest in the goods sold.

Question 16

Secured Creditors

Answer 16

Creditors who have a legal claim to a debtor’s specific property as collateral for repayment.

Question 17

Unsecured Creditors

Answer 17

Creditors who do not have a claim to specific property and must rely on legal means to collect debts.

Question 18

Garnishment

Answer 18

A legal process through which creditors collect unpaid debts by seizing the debtor’s wages or bank accounts.

Question 19

Judgment Lien

Answer 19

A lien on the debtor’s property granted to a creditor after a court judgment in the creditor’s favor.

Question 20

Sheriffâ’s Sale

Answer 20

A public auction where property seized under a court order is sold to satisfy a debt.

Question 21

Judicial Process

Answer 21

The formal legal proceedings used to settle disputes, including debt collection and the enforcement of judgments.

Question 22

Judicial Lien

Answer 22

A lien obtained through court action, granting the creditor a claim to the debtor’s property.

Question 23

Consensual Lien

Answer 23

A lien created by agreement between the debtor and creditor, typically in secured transactions.

Question 24

Levy

Answer 24

The legal seizure of property to satisfy a debt, often carried out by a sheriff under a court order.

Question 25

Replevin

Answer 25

A legal action that allows a creditor to recover specific property wrongfully held by the debtor.

Question 26

Fraudulent Transfer (Voidable Transactions)

Answer 26

A transfer of assets made with intent to hinder, delay, or defraud creditors, which can be voided by the court.

Question 27

Voidable Title

Answer 27

A title that can be voided by the original owner due to fraud or misrepresentation during the transfer.

Question 28

Nemo Dat Rule

Answer 28

A legal doctrine stating that one cannot transfer better title to property than they themselves hold.

Question 29

Warranty of Title

Answer 29

A guarantee that the seller has the legal right to transfer ownership of the goods and that the title is free from claims.

Question 30

Credit Bid

Answer 30

A bid made by a secured creditor at a foreclosure auction using the debt amount instead of cash.

Question 31

Foreclosure

Answer 31

The legal process by which a creditor repossesses and sells a property used as collateral when the debtor defaults.

Question 32

Credit Transactions

Answer 32

Transactions that involve the extension of credit from one party to another, such as loans or lines of credit.

Question 33

Default Judgment

Answer 33

A judgment entered against a debtor when they fail to respond to a lawsuit or appear in court.

Question 34

Mechanic’s Lien

Answer 34

A lien placed on a property by contractors or suppliers for unpaid work or materials.

Question 35

Purchase Money Security Interest (PMSI)

Answer 35

A security interest in goods that secures the loan used to purchase those goods, giving the lender priority over other creditors.