Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 1 Chapter 33 Creditors, Debtors, and Bankruptcy Chapter 33 Creditors, Debtors, and Bankruptcy Legal Protection of Creditors Legal Protection of Debtors and Credit Card Users Bankruptcy

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 2 Chapter Legal Protection of Creditors GOALS Recognize the value of a security interest Contrast a secured loan with an unsecured loan

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 3 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

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 4 Chapter 33 What is the primary difference between a surety and a guarantor?

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 5 Chapter 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

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 6 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

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 7 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

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 8 Chapter 33 Name at least four of the six approaches the law takes to protect debtors.

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 9 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

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 10 Chapter 33 What is the liability limit for unauthorized credit card charges?

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 11 Chapter Bankruptcy GOALS Differentiate between the various types of bankruptcy filings List the stages of the Chapter 7 bankruptcy procedure

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 12 Chapter 33 THE BANKRUPTCY ACT Extended time payment planChapter 13 Debt relief for family farmsChapter 12 ReorganizationChapter 11 Liquidation, or “straight bankruptcy”Chapter 7

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 13 Chapter 33 Of the various bankruptcy plans, which one involves total liquidation of the debtor’s nonexempt assets?

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 14 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

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 15 Chapter 33 What are the two types of bankruptcy under Chapter 7?

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 16 Chapter 33 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

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 17 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

Law for Business and Personal Use © South-Western, a part of Cengage LearningSlide 18 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.