Creditors, Debtors, & Bankruptcy

Chapter 33

CreditWhole or partial payment is delayed

PawnCollateralSecured/Unsecured LoanGarnishmentFinance ChargesCredit 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 PartiesSurety – 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 - LawsFederal 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

BankruptcyA legal process to get out of debt when you

can no longer make all your required payments.

Source: NEFE

Bankruptcy BasicsChapter 7

LIQUIDATION or “Straight Bankruptcy”Wipes out most of your debt in exchange for

liquidating your assets

Chapter 13 REORGANIZATON OF DEBTSKeep Assets and make payments over 3-5 years

Chapter 11 (Businesses)REORGANIZATION OF THE COMPANY

Bankruptcy ProceduresNon-dischargeable Debts

see page 619

Exempt Propertysee page 619-620

National Bankruptcy #sThe 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 BankruptcyInfluences financial freedomLimits choicesPay more for creditOther people absorb your debt

Even though it is legal is it unethical?????Yes, No, Depends?