Exam 15: Priority of Creditors

In a secured transaction pursuant to the Personal Property Security Act,etc.,what is the purpose of a registration?

Elizabeth gave a guarantee to the Bank in support of a loan to Tomasz.Over the next few years,the Bank and Tomasz made a number of alterations to the loan agreement.The effect of these changes was to significantly increase the amount owing to the Bank.Elizabeth had no notice or knowledge of these changes,nor did she consent to any such changes.What is the likely result?

Any substantial change in the nature of the contract between the creditor and the debtor without the guarantor's consent will relieve the guarantor of any obligation.

Where,in the face of default,goods are repossessed and resold,but the amount recovered is not enough to cover what is owing,what are the rights of the creditor?

Joe worked as a subcontractor for Harry in framing a house owned by Sam.When it became apparent to Joe that he was not going to be paid by Harry,what rights did Joe have under these circumstances?

Holtz hires Joe,a builder,to convert his attic into an apartment so that Holtz's mother can move in.Joe employs two carpenters,an electrician,and a plumber to do the actual work.When making payments to Joe,Holtz holds back the 10% required by statute.After waiting the legislated minimum period,Holtz discovers that several liens have been registered against his property.It turns out that Joe failed to pay the various subcontractors for their work.Which one of the following statements best describes Holtz's position?

Student loans survive bankruptcy and remain payable for up to seven years after the debtor ceases to be a student.

Legislation and the principles of contract and common law primarily protect the interests of the debtor in the event of a default.

Distinguish between bankruptcy and insolvency.

Owen bought a car from Ace Fancy Cars Ltd.on time.The salesman claimed that it had a new engine and a new transmission.Security was registered against the vehicle under the Personal Property Security Act,and Owen's father was required to sign a guarantee to support the debt.Two months later,the car broke down,and upon inspection,it was discovered that,in fact,a used motor and transmission had been installed,not a new one.Owen refused to make any further payments and demanded his money back.The car dealership ignored their right to repossess the vehicle and demanded payment from Owen's father.Explain Owen's father's rights in these circumstances.

Give three examples of types of things that can be used as security under the Personal Property Security Act.

A guarantee must be supported by consideration,just like any other contractual obligation.Explain what consideration is present when one person guarantees the debt of another.

Settlements involve the transfer of assets for nominal or no consideration.

With few exceptions,once a bankrupt is discharged,there is no longer an obligation to pay back the unsecured creditors.

What is the effect if a debtor fraudulently transfers property to a bona fide purchaser for value?

The owner of the house had contracted with a general contractor,Mr.Hadrian,for a greenhouse addition to the house at a cost of $20,000.In accordance with legislation,the owner withheld 10% and waited the legislated period of time within which any liens were to be filed.Which of the following correctly describes the owner's liability?

When the value of the security is not great enough to cover the debt,a secured creditor is an unsecured creditor for that outstanding amount.

What is the effect on a corporation when it goes bankrupt?

The Bankruptcy and Insolvency Act allows a supplier of goods to a bankrupt to seek return of those goods.

You are in debt to three creditors for $200,000,and the debt is increasing because you are not able to meet your monthly financial obligations.Which of the following is false with regard to your situation?