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Creditors, Debtors, & Bankruptcy. Chapter 33. Credit. Whole or partial payment is delayed Pawn Collateral Secured/Unsecured Loan Garnishment Finance Charges Credit Rating. Involuntary Liens. Lien – a legal right in another’s property as security for the performance of an obligation

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Creditors, Debtors, & Bankruptcy

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Creditors, Debtors, & Bankruptcy

Chapter 33


Credit

Whole or partial payment is delayed

  • Pawn

  • Collateral

  • Secured/Unsecured Loan

  • Garnishment

  • Finance Charges

  • Credit Rating


Involuntary Liens

  • Lien – a legal right in another’s property as security for the performance of an obligation

  • Mechanic’s Lien - a lien against realty available to one who has supplied labor or materials to improve it

  • Artisan’s Lien - a lien for unpaid services assessed against personal property that has been improved


Credit and Third Parties

  • Surety – third party agrees to be primarily liable if the payments are late

  • Guarantor – third party agrees to be secondarily liable if the payments are late


Credit System Abuses - Laws

  • Federal Equal Credit Opportunity Act

  • Federal Fair Debt Collection Practices Act

  • Federal Fair Credit Billing Act

  • Federal Fair Credit Reporting Act

  • Federal Credit Repair Organizations Act

Pages 611-612


Bankruptcy

  • A legal process to get out of debt when you can no longer make all your required payments.

    Source: NEFE


Bankruptcy Basics

  • Chapter 7

    • LIQUIDATION or “Straight Bankruptcy”

    • Wipes out most of your debt in exchange for liquidating your assets

  • Chapter 13

    • REORGANIZATON OF DEBTS

    • Keep Assets and make payments over 3-5 years

  • Chapter 11 (Businesses)

    REORGANIZATION OF THE COMPANY


Bankruptcy Procedures

  • Non-dischargeable Debtssee page 619

  • Exempt Propertysee page 619-620


National Bankruptcy #s

The number of personal bankruptcy filings in the fiscal year ending September 30, 2003, rose 7.8% from the same period in 2002, reaching 1,625,813, according to the American Bankruptcy Institute (ABI). That’s twice the number of people filing for personal bankruptcy protection in 1993.


Situations for filing bankruptcy.


Consequences of Bankruptcy

  • Influences financial freedom

  • Limits choices

  • Pay more for credit

  • Other people absorb your debt

    Even though it is legal is it unethical?????

    Yes, No, Depends?


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