BA 304 Business Law II - July 2010 BA 304-01
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Chapter 17 - Review

<< Back to Chapter 17 - Secured Transactions. Creditors Rights , and Bankruptcy

1) A secured transaction is a transaction in which the payment of a debt is guaranteed by personal property owned by the debtor.

2) Article 9 of the UCC govern secured transactions and personal property.

3) A secured interest is an interest in personal property or fixtures which secures payment or performance of an obligation.

4) is an interest in personal property or fixtures which secures payment or performance of an obligation is the person or party that holds the interest in the secured property.

5) A debtor is a person or party that has an obligation to the secured party.

6)A security agreement is the agreement by which the debtor gives the secured interest to the secured party.

7) Goods, indispensable paper, and ntangibles are examples of collateral.

8) Consumer goods and farm products are examples of goods.

9) Documents of title is an example of indispensable paper.

10) Accounts, goodwill, and literary rights are examples of an intangible.

11) When attachment occurs, the creditor becomes the secured party who has a security interest in the collateral.

12) A purchase-money security interest is formed when a debtor uses borrowed money from the secured party to buy the collateral

13) Perfection is defined as the series of legal steps a secured party takes to protect its rights and collateral from other creditors who wish to have their debts returned through the same collateral.

14) According to the UCC, the names and addresses of all the parties involved, a description of the collateral, and the signature of the debtor shoud be on a financing statement list.

15) Once a financing statement has been filed with a correct agency, the statement is valid under the UCC for 5 years.

16) Transfer of collateral to a secured party is called a pledge.

17) Types of collateral that must be perfected through possession are certificates of deposit, stock, and bonds.

18) A consumer good, under the UCC, is a good used or bought for use primarily for personal, family, or household purposes.

19) Under the UCC regarding a security interest in collateral that has been perfected in one state when the collateral is moved to another state, a security interest in collateral that has been perfected in one state will generally transfer to another state for a period of four months from the date that the property is brought into the other state.

20) Generally, once a secured party perfects its interest in collateral, the perfection is effective until the collateral is sold, exchanged, or transferred.

21) After-acquired property is the designation for property acquired by the debtor after a security agreement covering the property is made.

22) Inventory, livestock, and equipment can be considered after-acquired property.

23) When a debtor sells collateral, he or she receives proceeds, something that is exchanged for collateral.

24) A secured party automatically has an interest in proceeds.

25) Under the UCC, a secured party's interest in proceeds lasts for 10 days after the debtor receives the proceeds.

26) A termination statement is an amendment to a financing statement that states that the debtor has no obligation to the secured party.

27) Assuming a purchase-money security interest is not involved, regarding priority when there are two secured parties and neither has perfected, the party who attached its interest first will prevail.

28) If a purchase-money security interest is in inventory, a perfected purchase-money security interest has priority over a previously perfected interest that is not a purchase-money security interest when the purchase-money security interest party perfects its interest before or at the same time that the debtor receives the inventory, and also when the purchase-money security interest party checks for previous secured interest and gives proper notice of its security interest.

29) A buyer in the ordinary course of business is a person who routinely buys goods in good faith from a person who routinely sells these goods.

30) true if a buyer of a consumer good subject to purchase-money security interest later sells the good, as long as the buyer is not aware of the security interest, purchases the good for his or her personal use, and purchases the good before the secured party files a financial statement, the new buyer obtains the good free of the security interest.

31) A chattel paper is a writing that indicates both a monetary obligation and a security interest in specific goods.

32) An instrument is a writing that demonstrates a right to payment of money.

33) A buyer may purchase chatel paper or an instrument in the ordinary course of business and obtain the goods free of any security interest so long as the buyer is unaware of any security interest in the good.

34) Regarding the manner in which a secured party may sell collateral, the sale may be in either a private sell or a public sale.

35) Insolvent debtors is a term used in bankruptcy for debtors who cannot pay their debts in a timely fashion.

36) Congress recently make comprehensive changes to bankruptcy law with the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

37) Chapter 7 is used for a sale of a debtor's assets by a trustee and the distribution of money to creditors.

38) Chapter 11 is used as a reorganization of the debtor's financial affairs under supervision of the bankruptcy court.

39) Chapter 15 recognizes insolvency proceedings pending in a foreign country and relief for foreign debtors.

40) Title 11 of the United States Code contains the Bankruptcy Code

41) Regarding provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, under the act, an individual may not generally be considered a debtor unless within 180 days prior to filing, the debtor receives credit counseling from a nonprofit budget and credit counseling agency, under the act, if an individual was a debtor in a bankruptcy case that was dismissed within 180 days of the current case, the individual is generally not eligible to be a debtor under Chapters 7, 11, or 13, under the act, if a previous bankruptcy was completed rather than dismissed, the individual is generally permitted to file for bankruptcy again, and under the act, if a party completes a Chapter 7 bankruptcy, the party is not permitted to seek a Chapter 7 bankruptcy again for eight years.

42) Liquidation is called straight bankruptcy.

43) Liquidation occurs when a debtor turns over all assets to a truste.

44) A trustee is an individual who takes over administration of the debtor's estate.

45) Banks, railroads, and health maintenance organizations are ineligible for Chapter 7 relief in bankruptcy.

46) Once a voluntary liquidation proceeding under Chapter 7 is filed, the debtor's prepetition assets form the bankruptdy estate.

47) By filing an incoluntary petition under Chapter 7, creditors can attempt to force a debtor into bankruptcy.

48) Farmers, ranchers, and nonprofit organizations cannot be forced into involuntary bankruptcy under Chapter 7.

49) A court may presume that an individual is abusing the means test of the bankruptcy provisions of Chapter 7 when an individual's debt is primarily consumer debt and the individual's income is above the median income in his or her state.

50) An automatic stay is a moratorium for almost all creditor litigation against a debtor in a Chapter 7 bankruptcy.

51) Regarding actions that may be taken while an automatic stay is in effect in a Chapter 7 proceeding, creditors cannot attempt to repossess property during bankruptcy proceedings, creditor who received a judgment against a debtor prior to the bankruptcy filing may not act to enforce the judgment, and creditors cannot attempt to repossess property during bankruptcy proceedings, and a creditor who received a judgment against a debtor prior to the bankruptcy filing may not act to enforce the judgment; but legal actions to collect child support payments are not subject to the stay.

52) The effect of an automatic stay on claims of secured creditors in a Chapter 7 proceeding, the court may exclude secured creditors from the stay if they petition the court to show that they do not have adequate protection under the stay.

53) An order of relief means that bankruptcy relief is ordered and that the bankruptcy proceedings can continue.

54) Regarding rights of a trustee in a Chapter 7 bankruptcy, the trustee takes possession of the debtor's property and has it appraised, if someone else holds the debtor's property, the trustee has the power to require the person to return that properly, and the trustee may temporarily take over the debtor's business.

55) A creditors' meeting is a meeting of all creditors listed in the Chapter 7 required schedules for liquidation.

56) The interim trustee calls the creditors' meeting in a Chapter 7 proceeding.

57) When a determination is made regarding the identity of the trustee in a Chapter 7 proceeding, the creditors elect the trustee.

58) A discharge is a written federal court order signed by a bankruptcy judge stating that the debtor is immune from creditor actions to collect debts.

59) Individuals may receive a discharge of debt under Chapter 7 of the bankruptcy code.

60) Nondischargeable debts under a Chapter 7 bankruptcy filing include claims of willful or malicious conduct by the debtor that caused injury to another person or property, specific student loans, unless payment of the loans imposes undue hardship on the debtor,debts not discharged in previous bankruptcies, and judgments against a debtor for claims resulting from the debtor's drinking and driving.

61) A reaffirmation agreement is an agreement by which the debtor agrees to pay a debt even though it could be discharged.

62) Stockbrokers, commodities brokers, banks, and savings and loan companies are not permitted to file under Chapter 11 reorganization.

63) Under a Chapter 11 proceeding, for the plan to be accepted, two-thirds of the creditors of each class of creditors must vote to approve it.

64) Regarding Chapter 13 of the bankruptcy code, chapter 13 permits individuals to pay their debts to creditors in installment plans under the supervision of the court, any debtor who files under Chapter 13 could also have filed under Chapter 11, chapter 13 repayment plans are usually simpler and less expensive than Chapter 11 plans, and by statute Chapter 13 plans last between 36 and 60 months.

65) Regarding Chapter 12 of the bankruptcy code, a family farmer under Chapter 12 must have regular annual income, the family farmer's gross income must be at least 50 percent farm-dependent, more than 80 percent of the debt must be farm-related, and the total debt must be under $1.5 million.

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