Chapter 33 Creditors, Debtors, and Bankruptcy 10/29/2017 Chapter 33 Creditors, Debtors, and Bankruptcy 33-1 Legal Protection of Creditors 33-2 Legal Protection of Debtors and Credit Card Users 33-3 Bankruptcy Chapter 33 LAW

33-1 Legal Protection of Creditors GOALS Recognize the value of a security interest Contrast a secured loan with an unsecured loan Chapter 33

LAWS THAT PROTECT CREDITORS Laws allowing secured debts Pledges Involuntary liens Laws involving third parties Suretyship Guaranty Laws concerning unsecured debts Laws allowing garnishment of wages Chapter 33

What is the primary difference between a surety and a guarantor? Chapter 33

33-2 Legal Protection of Debtors and Credit Card Users GOALS Discuss the various areas of debtor protection available under the law Relate the protections afforded credit card users under the law Chapter 33

DEBTOR PROTECTION Laws setting maximum interest rates Laws requiring disclosure of terms Laws challenging unconscionable contracts Laws prohibiting abuses in the credit system Laws requiring notice of debt payment to be recorded Laws allowing debtors to cancel debts and start over Chapter 33

LAWS PROHIBITING ABUSES IN THE CREDIT SYSTEM Federal Equal Credit Opportunity Act Federal Fair Debt Collection Practices Act Federal Fair Credit Billing Act Federal Fair Credit Reporting Act Credit Repair Organizations Act Chapter 33

Name at least four of the six approaches the law takes to protect debtors. Chapter 33

PROTECTIONS FOR CREDIT CARD USERS Issuer of card specifies the limit of available credit Cardholder is liable for all purchases Liability limited under certain conditions Chapter 33

What is the liability limit for unauthorized credit card charges? Chapter 33

33-3 Bankruptcy GOALS Differentiate between the various types of bankruptcy filings List the stages of the Chapter 7 bankruptcy procedure Chapter 33

THE BANKRUPTCY ACT Chapter 7 Liquidation, or “straight bankruptcy” Reorganization Chapter 12 Debt relief for family farms Chapter 13 Extended time payment plan Chapter 33

Of the various bankruptcy plans, which one involves total liquidation of the debtor’s nonexempt assets? Chapter 33

BANKRUPTCY PROCEDURE UNDER CHAPTER 7 The bankruptcy petition Voluntary bankruptcy Involuntary bankruptcy Required informational filing Selection of the trustee in bankruptcy Non-dischargeable debts Exempt property Liquidation and distribution of proceeds Chapter 33

What are the two types of bankruptcy under Chapter 7?

PREVENT LEGAL DIFFICULTIES Be wise about credit . . . In applying for credit, always be accurate and honest. Lies about one’s credit history are often exposed. If you give property as security for a debt, be sure it is returned or properly released when the debt is paid. Continued on the next slide Chapter 33

PREVENT LEGAL DIFFICULTIES Protect your rights as a debtor by learning about them and exercising them when appropriate. The Fair Credit Reporting Act, Fair Credit Billing Act, Equal Credit Opportunity Act, Fair Debt Collection Practices Act, and related statutes are of limited value without consumer demand for their enforcement. Continued on the next slide Chapter 33

PREVENT LEGAL DIFFICULTIES A person who repairs your television, watch, car, or other personal property can exercise an artisan’s lien on the property, retaining possession until paid, or eventually selling the goods. Before work is begun get a detailed written estimate of anticipated cost. Chapter 33