Law of Commercial Transactions Final

PMSI (Purchase Money Security Interest)
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gives the creditor an enforceable security interest.
-3 Requirements
1) unless the creditor is in possession of the collateral, there must be a written or authenticated security agreement that clearly describes the collateral.
2) the secured party must give the debtor something of value.
3) the debtor must have rights in the collateral.
2 situations

1) Possession- pledge collateral as security for debt, transfer the collateral to the creditors possession, and the creditor would return the collateral when the debt is paid.

2) PMSI in consumer goods- Goods bought primarily for personal, family, or household purposes.
*Perfect automatically, don't have to file
Chapter 7 Bankruptcy (Liquidation)Can be: -Voluntary: Order for relief is automatic -Involuntary: Order for relief is not automaticPreferencesA debtor is not permitted to transfer property or to make a payment that favors or gives preferences to one creditor over the others.preferential paymentsInsolvent debtor transfers property to satisfy a preexisting debt, within 90 days before the filing of the bankruptcy petition.Preferences to Insiders(close relationship/family to debtor) Trustee can recover property transferred within 1 year of filing for bankruptcy. -2 years if fraudulentUnsecured Creditor PriorityEach Level must be paid before moving on. Each creditor within a certain level paid proportionately if not enough. 1) Domestic support obligations 2) Administrative expenses 3) Employment items 4) Taxes (Fed. & State) 5) General unsecured creditorsClaims that cant be discharged-Entities can never get a discharge, only individuals -Taxes -Student Loans -Domestic Support obligations -Anything debtor lied aboutChapter 11 BankruptcyReorganization; most commonly used by corporate debtors.Chapter 13 BankruptcyIndividuals repayment plan -Used commonly if make to much money to file for chapter 7.Chapter 9 Bankruptcymunicipal debt adjustmentChapter 12 BankruptcyA form of bankruptcy that lets family farmers and fishing businesses create a plan for debt repayment that allows them to keep their operations running