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The filing of a petition, however, does not operate as a stay for certain types of actions listed under 11 U.S.C. § 362(b). The stay provides a breathing spell for the debtor, during which negotiations can take place to try to resolve the difficulties in the debtor’s financial situation. A case filed under chapter 11 of the United States Bankruptcy Code is frequently referred to as a “reorganization” bankruptcy. Usually, the debtor remains “in possession,” has the powers and duties of a trustee, may continue to operate its business, and may, with court approval, borrow new money. A plan of reorganization is proposed, creditors whose rights are affected may vote on the plan, and the plan may be confirmed by the court if it gets the required votes and satisfies certain legal requirements.
11 U.S.C. §§ 1121, 1125. The disclosure statement is a document that must contain information concerning the assets, liabilities, and business affairs of the debtor sufficient to enable a creditor to make an informed judgment about the debtor’s plan of reorganization. The information required is governed by judicial discretion and the circumstances of the case.
Dictionary Entries Near creditor
The second category does not include an employee who is a co-obligor or guarantor on a card issued to the employer for business purposes, nor does it include a person who is merely the authorized user of a card issued to another. In open-end credit plans, the billing cycle determines the intervals for which periodic disclosure statements are required; these intervals are also used as measuring points for other duties of the creditor. Typically, billing cycles are monthly, but they may be more frequent or less frequent (but not less frequent than quarterly). We refer to a lender who has a lien or other legal claim to the debtor’s assets as a secured creditor. Unsecured creditors have no recourse to debtors’ assets. (4) The representation or implication that nonpayment of any debt will result in the arrest or imprisonment of any person or the seizure, garnishment, attachment, or sale of any property or wages of any person unless such action is lawful and the debt collector or creditor intends to take such action.
Construction on previously acquired vacant land. A residential mortgage transaction includes a loan to finance the construction of a consumer’s principal dwelling on a vacant lot previously acquired by the consumer. A residential mortgage transaction finances the acquisition of a consumer’s principal dwelling. The term does not include a transaction involving a consumer’s principal dwelling if https://kelleysbookkeeping.com/ the consumer had previously purchased and acquired some interest to the dwelling, even though the consumer had not acquired full legal title. The definition is not limited to first lien transactions. For example, a consumer might assume a paid-down first mortgage (or borrow part of the purchase price) and borrow the balance of the purchase price from a creditor who takes a second mortgage.
creditor
Trust A makes 15 extensions of consumer credit annually; Trust B makes 10 extensions of consumer credit annually; and Trust C makes 30 extensions of consumer credit annually. Only Trust C is a creditor for purposes of the regulation. Effect of satisfying one test. Once one of the numerical Creditor Definition tests is satisfied, the person is also a creditor for the other type of credit. For example, in 2007 a person extends consumer credit secured by a dwelling 5 times. That person is a creditor for all succeeding credit extensions, whether they involve credit secured by a dwelling or not.
- The U.S. trustee may not file a plan.
- For example, if in 2007 a person extends credit not secured by a dwelling 8 times and credit secured by a dwelling 3 times, it is not a creditor.
- For example, if much of the customer base of a clothing store makes repeat purchases, the fact that some consumers use the plan only once would not affect the characterization of the store’s plan as open-end credit.
- Information that much of the creditor’s customer base with accounts under the plan make repeated transactions over some period of time is relevant to the determination, particularly when the plan is opened primarily for the financing of infrequently purchased products or services.
- 11 U.S.C. §§ 109(g), 362(d)-(e).
A company’s employees may be creditors when the firm owes them wages and bonuses, as are governments (owed taxes). (h) Consumer credit means credit extended to a natural person primarily for personal, family, or household purposes. (v) A refusal to extend credit because the creditor does not offer the type of credit or credit plan requested. (a) Not later than one year after the effective date of this subchapter and at one-year intervals thereafter, the Bureau shall make reports to the Congress concerning the administration of its functions under this subchapter, including such recommendations as the Bureau deems necessary or appropriate. In addition, each report of the Bureau shall include its assessment of the extent to which compliance with this subchapter is being achieved and a summary of the enforcement actions taken by the Bureau under section 1692l of this title. (b) In the exercise of its functions under this subchapter, the Bureau may obtain upon request the views of any other Federal agency which exercises enforcement functions under section 1692l of this title.
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May disclose a 1/360 rate as a daily periodic rate, without further explanation, if it is in fact only applied 360 days per year. But if the creditor applies that rate for 365 days, the creditor must note that fact and, of course, disclose the true annual percentage rate. B. Any card, key, plate, or other device that is used in order to obtain petroleum products for business purposes from a wholesale distribution facility or to gain access to that facility, and that is required to be used without regard to payment terms.
Find information about bankruptcy laws, including answers to some of the most frequently asked questions. These videos will give you basic information about the process, the relief it offers, and how to find the legal help you may need. In North Carolina and Alabama, bankruptcy administrators perform similar functions that U.S. trustees perform in the remaining forty-eight states. The bankruptcy administrator program is administered by the Administrative Office of the United States Courts, while the U.S. trustee program is administered by the Department of Justice. For purposes of this publication, references to U.S. trustees are also applicable to bankruptcy administrators.
Insurance premium plans that involve payment in installments with each installment representing the payment for insurance coverage for a certain future period of time, unless the consumer is contractually obligated to continue making payments. Guarantors, endorsers, and sureties are not generally consumers for purposes of the regulation, but they may be entitled to rescind under certain circumstances and they may have certain rights if they are obligated on credit card plans. Assume a creditor provides a consumer with an application form containing 20 questions about the consumer’s credit history and the collateral value. The consumer submits answers to nine of the questions and informs the creditor that the consumer will contact the creditor the next day with answers to the other 11 questions.
(ii) Will become (or has the option to become), for no additional consideration or for nominal consideration, the owner of the property upon compliance with the agreement. (14) Credit means the right to defer payment of debt or to incur debt and defer its payment. (s) Inadvertent error means a mechanical, electronic, or clerical error that a creditor demonstrates was not intentional and occurred notwithstanding the maintenance of procedures reasonably adapted to avoid such errors.
Furthermore, there’s the potential issue of late payment interest, which can hurt your company’s bottom line. Ensure you’re maintaining a robust accounts payable process, negotiate longer credit terms (where possible), and build strong working relationships with suppliers. Although these two terms might seem straightforward, understanding the role that debtors and creditors play in your business is vital. Depending on the specifics of your business, you may find that you are both a creditor and a debtor. Find out more with our comprehensive guide to the difference between debtors and creditors. Let’s kick off with our creditor definition.
In contrast, borrowers with low credit scores are riskier for creditors and are often charged higher interest rates to address that risk. To mitigate risk, most creditors tie interest rates or fees to the borrower’s creditworthiness and past credit history. Borrowers with good credit scores are considered low-risk to creditors, and these borrowers often garner low-interest rates. Creditors often charge interest on the loans they offer their clients, such as a 5% interest rate on a $5,000 loan.
CHAPTER 2. DEBTOR AND CREDITOR RELATIONSHIPS
11 U.S.C. §§ 308, 1116, 1187. For both types of small business cases the combined total of secured and unsecured debts must be owed as of the date of filing for bankruptcy relief. The courts are required to charge a $1,167 case filing fee and a $571 miscellaneous administrative fee.
- Creditors can take the form of institutions or persons.
- Another example of the faster pace of small business and subchapter V cases is that the debtor may not need to file a separate disclosure statement if the court determines that adequate information is contained in the plan.
- Nothing on this website is legal advice.
- A creditor is an entity, company or person that has provided goods, services or a monetary loan to a debtor.
Subchapter V cases go beyond other chapter 11 and small business cases by allowing for relaxed plan confirmation requirements. Plans can be confirmed as long as they do not discriminate unfairly, are fair and equitable with respect to each class of claims or interests, provide that all projected disposable income of the debtor (or equivalent value) is paid into the plan for a three to five year period. While we may borrow money in many contexts without thinking of ourselves as “debtors,” most of us are typically debtors in some situation. Many people use credit cards, making them the debtor to their credit card company. Open-end real estate mortgages. Some credit plans call for negotiated advances under so-called open-end real estate mortgages.