Chapter 33 Section 1
Tom Loshinskie
Pledge
● Creditor may use debtor’s personal
property as security
● Can be sold in case of a default
● Can be repledged, as long as debtor gets it
back when debt is paid
Pawn
● Legally regulated pledge
● Pawnbroker lends money and takes tangible
property as security
● Pawnbrokers must be licensed
Liens
● Allow creditor to sell debtor’s property
● Mechanic’s Lien: Allows someone who has
not been paid to file a claim, the property
will then be sold and the holder of the lien
will be paid the amount they are owed
Liens (cont.)
● Artisan’s Lien
o
Someone who has not been paid for a service, such
as a repair, can keep the property until the service
is paid for
Suretyship
● Places a third party primarily liable for a debt
● Discharged by:
o The debtor paying the debt in full
o The creditor changing the contract without the surety’s consent
● Right of Contribution
o Any cosurety who pays the full amount can file
against the other cosureties for their proportionate
amounts
Guaranty
● Guarantor will pay if principal debtor fails
to
● Creditor must sue debtor first
● Must be in writing and signed by guarantor
Unsecured Debts
● Creditor may take unsecured debts:
o
o
When debt is small
If debtor has very good credit rating
● Upon default, creditor must sue debtor
● Creditor follows costly process to collect
Garnishment
● Creditor’s claim must be shown valid and
fair in court
● Creditor receives portion of debtor’s wages
directly from debtor’s employers
● Total amount garnished is limited to 25
percent of the debtor’s pay
Summary
Creditors give money to debtors, but their primary concern is that the
loan will be paid promptly. Creditors use secured debts to protect themselves
from a defaulting debtor. There are pledges, which allow the creditor to have
possession of a piece of the debtor’s property until the debt is paid. A lien
gives the creditor the right to sell a property in the case of a default. There
are also some secured debts that involve third parties, such as a suretyship
and the guaranty relationship. Creditors may take an unsecured debt,
however they must go through a costly procedure to sue in the case of a
default.
33-2 Legal Protection of
debtors and credit card
users
Isaac Roer/William Crawford
Laws protecting unfair practice
1. setting maximum interest rates
2. requiring clear and complete disclosure of loan/lease
terms.
3. Changing the terms of unconscionable contracts
4. Correcting specific abuses of the credit system
5. requiring the creditor to record a public notice when
certain debts have been paid
6. allowing the debtor to take bankruptcy and thereby
cancel most debts and start afresh
Over-charging without options
1. Judge may refuse contractual obligations
2. Refuse to enforce the contract without the
unreasonable charge
3. limit the clause's application so the
contract becomes fair.
Federal equal credit opportunity act
1. May not refuse based on sex, statues, race, religion.
2. May not ask the applicants marital statues
3. A creditor may not stop married women from using
maiden name for their accounts.
4. Request info about birth control practices, or child
carrying abilities or ideas.
5. married individuals have the right to see the credit
history of both sides of a joint account
Federal fair credit billing act
1. Creditors must mail bills at least 2 weeks before they
are due and must be able to be acknowledged in 30
days
2. Creditors cannot send extensive letters for billing
3. Credit card holders may withhold payment for
defective goods without being liable for the entire
amount
Credit repair organization act
Credit repair companies cannot make false claims about
its services, charge until they complete promised service,
perform any service without a written contract and must
have completed a 3 day wait period,
Contracts with a repair service
specifications
the payment terms must include the total cost
of the services
repair companys name address and contact
info
a detailed description of the services
performed
How long it will take for the results
guarantees offered
Credit card requirements
Card holder had asked for and received the
credit card or had signed/used the card.
Card issuer had given adequate notice of the
possible liability for unauthorised use.
Card issuer had provided the cardholder with a
description of hot to notify the card is lost or
stolen
Credit card requirements
Card issuer had provided positive means for
identification on the card such as space for
the holder’s signature or photograph
Unauthorized use happend before cardholder
notified issuer that card was lost or stolen
Summmummummummary
This section talks about nothing because
books can’t speak but written upon the pages
is things about liability. It went into detail
about both the pledger and the pledgee. also
the requirements that insurers and credit card
issuers must follow.
Chapter 33
Section 3-Bankruptcy
James Welch and Abbie Huber
Chapter 7-Liquidation
• Involves the sale for cash of bank accounts, stocks, and bonds
of the debtor who further distribute the proceeds to creditors
• Results in the discharge of most of the debtor’s financial
obligations
• Chapter 7 bankruptcy can be denied if the debtors have
income above the median income for similarly sized families
in their state
Chapter 11-Reorganization
• Designed to keep a business organization (corporations,
partnerships, or sole proprietorships) in operation with no
liquidation
• All creditors affected must accept this plan to reorganize
• Chapter 11 procedure is for businesses whose debt does not
exceed $2,000,000
Chapter 12-Debt Relief for
Family Farms
• Under this chapter, an individual, couple, or sometimes a
corporation or partnership can file a petition for relief
• The limit on total debt is more than $3,000,000 and the debt
that must come from the farming operation is 50%
Chapter 13-Extended Time
Payment Plan
• Available only to individuals who have regular income
• Debtor must have unsecured debts less than $336,900 or
secured debts less than $1,010,650
• Debtor must submit a plan of payment of debts within 3-5
years
Required Information Filing
In either voluntary or involuntary bankruptcy proceedings, the
debtor must file the following information with the court:
• A list of all creditors and amount owed to each
• A list of all property owned, including property claimed to be
exempt from seizure
• A statement explaining the debtor’s financial affairs
• A list of current income and expenses
Non-Dischargeable Debts
• Certain taxes
• Alimony and child support
• Claims against the debtor for property obtained by fraud,
embezzlement, or larceny
• Judgments against the debtor for willful and malicious injury
to another
• Student loans owed to the government or to a nonprofit
school of higher learning, unless the loan was due more than
seven years before the bankruptcy
• Judgments against the debtor resulting from drunk driving
Exempt Property
• Real property, including co-op or mobile home, to $18,450
• Life insurance payments for person the debtor depended on
for support
• Life insurance policy with loan value, in dividends or interest
to $9,850
• Alimony and child support
• Pensions and retirement benefits
• Public assistance
• Social security
• Unused portion of homestead exemption
Exempt Property Cont.
•
•
•
•
•
•
•
•
•
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$475 per item of household goods up to a total of $9,850
Health aids
Jewelry to $1,225
Motor vehicle to $2,950
Personal injury compensation payments to $18,450
Wrongful death payments
Crime victims compensation
Unemployment compensation
Veterans’ benefits
Tools of the debtor’s trade, books, and equipment to $1,850
Summary
• In this section of Chapter 33, we learned the different forms
of bankruptcy and the stages of each bankruptcy procedure.
We also learned about the different forms of Chapter 7 under
voluntary and involuntary bankruptcy. What we found
interesting was the leeway allowed to farmers under Chapter
12 bankruptcy.