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BUS 607 Week 4 Discussion 2 Bankruptcy

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How is a security interest created and how is it perfected? Provide an example. If you are the creditor, what is difference between having a perfected security interest and an unperfected interest? W... hat is a “reorganization” bankruptcy and how is it different than an “ordinary” bankruptcy? Give examples of each Security interest is created using the rules of Article 9 of the UCC, the party (secured) must give a value, the debtor MST have collateral rights and the debtor must have signed a secured agreement. A person can also create a secured interest by taking possession of collateral (perfection), this is an enforceable interest due to the fact that they already have the collateral and must be paid back in order for the debtor to be given possession back. In order for a security interest to become perfected. In order to be perfected is by filing a financing statement or even the security agreement which gives PUBLIC notice to 3 rd parties of the secured party’s security interest. The purpose of perfecting is to protect collateral that could possibly have two or more creditors for the same collateral. Perfecting keeps another creditor from having rights to the property that they might also have. Bankruptcy Chapter 11 reorganization is where the creditors and individuals come together to form a plan in which the debtor agrees to pay a portion of the debt owed and then is allowed to be forgiven of the rest of the debt. This is usually done with corporations and anyone that qualifies for a chapter 7 bankruptcy can qualify to reorganize instead. An ordinary bankruptcy is also called a chapter7 bankruptcy is one of the simplest kinds of bankruptcy. Chapter 7 discharges personal liability for most debts. Chapter 7 cost less but last longer on credit reports than chapter 11. In chapter 7na person is able to keep all exempt assets. [Show More]

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